Basic Statistics

for Business

& Economics

Ninth Edition

LIND MARCHAL WATHEN

Basic Statistics for

BUSINESS &

ECONOMICS

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Basic Statistics for

BUSINESS &

ECONOMICS

NINTH EDITION

DOUGLAS A. LIND

Coastal Carolina University and The University of Toledo

WILLIAM G. MARCHAL

The University of Toledo

SAMUEL A. WATHEN

Coastal Carolina University

BASIC STATISTICS FOR BUSINESS AND ECONOMICS, NINTH EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2019 by

McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions

© 2013, 2011, and 2008. No part of this publication may be reproduced or distributed in any form or

by any means, or stored in a database or retrieval system, without the prior written consent of McGrawHill Education, including, but not limited to, in any network or other electronic storage or transmission,

or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside

the United States.

This book is printed on acid-free paper.

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All credits appearing on page or at the end of the book are considered to be an extension of the

copyright page.

Library of Congress Cataloging-in-Publication Data

Names: Lind, Douglas A., author. | Marchal, William G., author. | Wathen,

Samuel Adam. author.

Title: Basic statistics for business and economics / Douglas A. Lind, Coastal

Carolina University and The University of Toledo, William G. Marchal, The

University of Toledo, Samuel A. Wathen, Coastal Carolina Universit.

Description: Ninth edition. | New York, NY : McGraw-Hill Education, [2019]

Identifiers: LCCN 2017034976 | ISBN 9781260187502 (alk. paper)

Subjects: LCSH: Social sciences—Statistical methods. |

Economics—Statistical methods. | Industrial management—Statistical methods.

Classification: LCC HA29 .L75 2019 | DDC 519.5—dc23 LC record available at

https://lccn.loc.gov/2017034976

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a

website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill

Education does not guarantee the accuracy of the information presented at these sites.

mheducation.com/highered

D E D I CATI O N

To Jane, my wife and best friend, and our sons, their wives, and our

grandchildren: Mike and Sue (Steve and Courtney), Steve and Kathryn

(Kennedy, Jake, and Brady), and Mark and Sarah (Jared, Drew, and Nate).

Douglas A. Lind

To Oscar Sambath Marchal, Julian Irving Horowitz, Cecilia Marchal

Nicholson, and Andrea.

William G. Marchal

To my wonderful family: Barb, Hannah, and Isaac.

Samuel A. Wathen

A NOTE FROM THE AUTHORS

Over the years, we received many compliments on this text and understand that it’s a

favorite among students. We accept that as the highest compliment and continue to

work very hard to maintain that status.

The objective of Basic Statistics for Business and Economics is to provide students

majoring in management, marketing, finance, accounting, economics, and other fields of

business administration with an introductory survey of descriptive and inferential statistics. To illustrate the application of statistics, we use many examples and e

xercises that

focus on business applications, but also relate to the current world of the college student. A previous course in statistics is not necessary, and the mathematical requirement

is first-year algebra.

In this text, we show beginning students every step needed to be successful in

a basic statistics course. This step-by-step approach enhances performance, accelerates preparedness, and significantly improves motivation. Understanding the

concepts, seeing and doing plenty of examples and exercises, and comprehending

the application of statistical methods in business and economics are the focus of

this book.

The first edition of this text was published in 1967. At that time, locating relevant

business data was difficult. That has changed! Today, locating data is not a problem.

The number of items you purchase at the grocery store is automatically recorded at

the checkout counter. Phone companies track the time of our calls, the length of calls,

and the identity of the person called. Credit card companies maintain information on

the number, time and date, and amount of our purchases. Medical devices automatically monitor our heart rate, blood pressure, and temperature from remote locations.

A large amount of business information is recorded and reported almost instantly.

CNN, USA Today, and MSNBC, for example, all have websites that track stock prices

in real time.

Today, the practice of data analytics is widely applied to “big data.” The practice

of data analytics requires skills and knowledge in several areas. Computer skills are

needed to process large volumes of information. Analytical skills are needed to

evaluate, summarize, organize, and analyze the information. Critical thinking skills

are needed to interpret and communicate the results of processing the

information.

Our text supports the development of basic data analytical skills. In this edition,

we added a new section at the end of each chapter called Data Analytics. As you

work through the text, this section provides the instructor and student with opportunities to apply statistical knowledge and statistical software to explore several business environments. Interpretation of the analytical results is an integral part of these

exercises.

A variety of statistical software is available to complement our text. Microsoft Excel

includes an add-in with many statistical analyses. MegaStat is an add-in available for

Microsoft Excel. Minitab and JMP are stand-alone statistical software available to download for either PC or Mac computers. In our text, Microsoft Excel, Minitab, and MegaStat

are used to illustrate statistical software analyses. When a software application is presented, the software commands for the application are available in Appendix C. We use

screen captures within the chapters, so the student becomes familiar with the nature of

the software output.

Because of the availability of computers and software, it is no longer necessary to

dwell on calculations. We have replaced many of the calculation examples with interpretative ones, to assist the student in understanding and interpreting the statistical results.

In addition, we place more emphasis on the conceptual nature of the statistical topics.

While making these changes, we still continue to present, as best we can, the key concepts, along with supporting interesting and relevant examples.

vi

WHAT’S NEW IN THE NINTH EDITION?

We have made many changes to examples and exercises throughout the text. The section on “Enhancements” to our text details them. There are two major changes to the

text. First, the chapters have been reorganized so that each section corresponds to a

learning objective. The learning objectives have been revised.

The second major change responds to user interest in the area of data analytics.

Our approach is to provide instructors and students with the opportunity to combine

statistical knowledge, computer and statistical software skills, and interpretative and

critical thinking skills. A set of new and revised exercises is included at the end of each

chapter in a section titled “Data Analytics.”

In these sections, exercises refer to three data sets. The North Valley Real Estate

sales data set lists 105 homes currently on the market. The Lincolnville School District

bus data list information on 80 buses in the school district’s bus fleet. The authors designed these data so that students will be able to use statistical software to explore the

data and find realistic relationships in the variables. The Baseball Statistics for the 2016

season is updated from the previous edition.

The intent of the exercises is to provide the basis of a continuing case analysis. We

suggest that instructors select one of the data sets and assign the corresponding exercises as each chapter is completed. Instructor feedback regarding student performance

is important. Students should retain a copy of each chapter’s results and interpretations

to develop a portfolio of discoveries and findings. These will be helpful as students

progress through the course and use new statistical techniques to further explore the

data. The ideal ending for these continuing data analytics exercises is a comprehensive

report based on the analytical findings.

We know that working with a statistics class to develop a very basic competence in

data analytics is challenging. Instructors will be teaching statistics. In addition, instructors will be faced with choosing statistical software and supporting students in developing or enhancing their computer skills. Finally, instructors will need to assess student

performance based on assignments that include both statistical and written components. Using a mentoring approach may be helpful.

We hope that you and your students find this new feature interesting and engaging.

vii

H OW A R E C H A P TE RS O RGA N I Z E D TO E N GAG E

STU D E NTS A N D PRO M OTE LE A R N I N G?

Chapter Learning Objectives

©goodluz/Shutterstock

MERRILL LYNCH recently completed a study of online investment portfolios for a sample

Each chapter begins with a set of

learning objectives designed to provide focus for the chapter and motivate

student learning. These objectives, located in the margins next to the topic,

indicate what the student should be

able to do after completing each section in the chapter.

of clients. For the 70 participants in the study, organize these data into a frequency

distribution. (See Exercise 43 and LO2-3.)

LEARNING OBJECTIVES

When you have completed this chapter, you will be able to:

LO2-1 Summarize qualitative variables with frequency and relative frequency tables.

LO2-2 Display a frequency table using a bar or pie chart.

LO2-3 Summarize quantitative variables with frequency and relative frequency distributions.

LO2-4 Display a frequency distribution using a histogram or frequency polygon.

DESCRIBING DATA: FREQUENCY TABLES, FREQUENCY DISTRIBUTIONS, AND GRAPHIC PRESENTATION

Chapter Opening Exercise

A representative exercise opens

LO2-3 the chapter and shows how the chapter

CONSTRUCTING

FREQUENCY

20

CHAPTER 2

quantitative

content can be applied to aSummarize

real-world

situation.

variables with frequency

and relative frequency

distributions.

Introduction to the Topic

Each chapter starts with a review of

the important concepts of theLin87500_ch02_019-052.indd

previous chapter and provides a link to the

material in the current chapter. This

step-by-step approach increases comprehension by providing continuity

across the concepts.

Example/Solution

After important concepts are introduced,

a solved example is given. This example

provides a how-to illustration and shows

a relevant business application that

helps students answer the question,

“How can I apply this concept?”

27

DISTRIBUTIONS

In Chapter 1 and earlier in this chapter, we distinguished between qualitative and quantitative

data. In the previous section, using the Applewood Automotive Group data, we summarized

two qualitative variables:

the location of the sale and the type of vehicle sold. We created

INTRODUCTION

frequency and relative

frequency tables and depicted the results in bar and pie charts.

The United States automobile retailing industry is highly competitive. It is dominated by

The Applewood

Auto Groupthat

data

several

quantitative

variables:

megadealerships

ownalso

andinclude

operate 50

or more

franchises, employ

overthe

10,000

age of the buyer,people,

the profit

the sale

the vehicle,

number

of dealerships

previand earned

generateon

several

billionof

dollars

in annual and

sales.the

Many

of the top

are wants

publiclyto

owned,

with shares

on sales

the New

Stock

Exchange

ous purchases. Suppose Ms. Ball

summarize

last traded

month’s

byYork

profit

earned

or NASDAQ.

In 2017,

the largest megadealership

for each vehicle. We can describe

profit using

a frequency

distribution. was AutoNation (ticker

symbol AN), followed by Penske Auto Group (PAG), Group 1 Automotive,

7/28/17

Inc. (ticker symbol GPI), and the privately owned Van Tuyl Group.

These

large

corporations

use

statistics

and

analytics

to

summarize

FREQUENCY DISTRIBUTION A grouping of quantitative data into mutually exclusive

and analyze

datathe

andnumber

information

to support their

As an exand collectively exhaustive classes

showing

of observations

indecisions.

each class.

ample, we will look at the Applewood Auto Group. It owns four dealerships and sells a wide range of vehicles. These include the popular

Korean brands Kia and Hyundai, BMW and Volvo sedans and luxury

How do we develop a frequency

distribution?

The

following

example

shows

the steps to

SUVs,

and a full line

of Ford

and Chevrolet

cars

and trucks.

construct a frequency distribution.

is to

tables, charts,

Ms.Remember,

Kathryn Ball our

is a goal

member

of construct

the senior management

team at

and graphs that will quickly summarize

theGroup,

data which

by showing

the location,

extreme

Applewood Auto

has its corporate

offices adjacent

to Kane

©Darren Brode/Shutterstock

is responsible

for tracking and analyzing vehicle sales and the profitability

values, and shapeMotors.

of theShe

data’s

distribution.

of those vehicles. Kathryn would like to summarize the profit earned on the vehicles sold

using tables, charts, and graphs that she would review and present to the ownership

E X A M P L E group monthly. She wants to know the profit per vehicle sold, as well as the lowest and

highest amount of profit. She is also interested in describing the demographics of the buyMs. Kathryn Ballers.

of What

the Applewood

Auto

wants to

summarize

the quantitative

are their ages?

HowGroup

many vehicles

have

they previously

purchased from one

of theaApplewood

What

of vehicle

they purchase?

variable profit with

frequencydealerships?

distribution

andtype

display

the did

distribution

with charts

The Applewood

Auto

Group

four answer

dealerships:

and graphs. With this

information,

Ms.

Balloperates

can easily

the following ques19

7:44 AM

tions: What is the

profit

eachsells

sale?

What

is the largest

maximum profit

• typical

Tionesta

Fordon

Lincoln

Ford

and Lincoln

cars andor

trucks.

• is

Olean

Automotive

Inc. has theprofit

Nissan

asAround

well as the

General

on any sale? What

the smallest

or minimum

onfranchise

any sale?

what

value Motors

of Chevrolet, Cadillac, and GMC trucks.

do the profits tend brands

to cluster?

• Sheffield Motors Inc. sells Buick, GMC trucks, Hyundai, and Kia.

S O L U T I O N • Kane Motors offers the Chrysler, Dodge, and Jeep lines as well as BMW and Volvo.

Every month, Ms. Ball collects data from each of the four dealerships

To begin, we show the profits

each

of into

the an

180

vehicle

sales listed

in Table

and for

enters

them

Excel

spreadsheet.

Last month

the2–4.

Applewood

This information is calledAuto

rawGroup

or ungrouped

data because

it is simplyAacopy

listing

sold 180 vehicles

at the four dealerships.

of the first

few observations appears to the left. The variables collected include:

TABLE 2–4 Profit on Vehicles Sold

Last Month by the Applewood Auto Group

•

Age—the age of the buyer at the time of the purchase. Maximum

• Profit—the amount earned by the dealership on the sale of each

Self-Reviews

Self-Reviews are interspersed

throughout each chapter and

follow Example/Solution sections. They help students monitor their progress and provide

immediate reinforcement for

that particular technique. Answers are in Appendix E.

$1,387

$2,148

$2,201

$vehicle.

963

$ 820

$2,230

$3,043

$2,584

$2,370

1,754

2,207

996 • 1,298

1,266

2,341

1,059

2,666

2,637

Location—the

dealership

where the

vehicle was

purchased.

Vehicle type—SUV,

hybrid, or2,991

truck.

1,817

2,252

2,813 • 1,410

1,741 sedan,

3,292compact,

1,674

1,426

42

CHAPTER 2

•

Previous—the

number

of

vehicles

previously

purchased

at

any of the

1,040

1,428

323

1,553

1,772

1,108

1,807

934

2,944

four Applewood dealerships by the consumer.

1,273

1,889

352

1,648

1,932

1,295

2,056

2,063

2,147

entire data 2,350

set is available

in Connect

and in Appendix

A.41,973

at the end

482 The 2,071

1,344

2,236

2,083

S E L F - R E V I E W 1,529

2–5 1,166

text.

3,082

1,320

1,144 of the

2,116

2,422

1,906

2,928

2,856

2,502

Source: Microsoft Excel

The hourly wages of the 15 employees of Matt’s Tire and Auto Repair are organized into

1,951

2,265

1,500

2,446

1,952

1,269

2,989

783

the following

table. 1,485

LO2-1

2,692

1,323

1,509

1,549

369

2,070

1,717

910

1,538

Hourly

Wages

Number

of

Employees

Summarize1,206

qualitative 1,760

1,638

2,348

978

2,454

1,797

1,536

2,339

Recall from

1 that techniques

used to describe a set of data are called descripvariables with

frequency

$ 8 Chapter

up to $10

1,342

1,919

1,961

2,498

1,238 3

1,606

1,955

1,957

2,700

tive statistics.

Descriptive

statistics 7organize data to show the general pattern of the

and relative frequency

10 up to

12

443

2,357 data, to

2,127

294 values1,818

1,680

2,199to expose

2,240

identify

tend 4to concentrate,

and

extreme2,222

or unusual

tables.

12 up to where

14

754

2,866 data values.

2,430

1,115

1,824

1,827

2,482 table.2,695

2,597

The

first

technique

we discuss

is a frequency

14 up

to 16

1

1,621

732

1,704

1,124

1,907

1,915

2,701

1,325

2,742

(a) What1,464

is the table called?

870

1,876

1,532 A grouping

1,938 of qualitative

2,084 data

3,210

2,250

1,837

FREQUENCY

TABLE

into

(b) Develop a cumulative

frequency

distribution and portray

the distribution

in amutually

cumula- exclusive and

1,174 tive frequency

1,626 collectively

2,010 exhaustive

1,688 classes

1,940

2,279 in each

2,842

showing2,639

the number 377

of observations

class.

polygon.

(c) On the

basis of the

cumulative

frequency 2,197

polygon, how many

1,412

1,762

2,165

1,822

842 employees

1,220 earn less

2,626

2,434

than

$11

per

hour?

1,809

1,915

2,231

1,897

2,646

1,963

1,401

1,501

1,640

2,415

2,119

2,389

2,445

1,461

2,059

2,175

1,752

1,821

E X E R C I S E S 1,546

1,766

335

2,886

1,731

2,338

1,118

2,058

2,487

CONSTRUCTING FREQUENCY TABLES

19. The following cumulative frequency and the cumulative relative frequency polygon

Minimum

for the distribution of hourly wages of a sample

of certified welders in the Atlanta,

Georgia, area is shown in the graph.

viii

7/28/17 7:44 AM

40

100

30

75

ent

ency

Lin87500_ch02_019-052.indd 20

36

CHAPTER 2

Frequency Polygon

STATISTICS IN ACTION

Statistics in Action

A frequency polygon also shows the shape o

121

gram. It consists of line segments connecting

th

the class midpoints and the class frequencies. T

is illustrated in Chart 2–5. We use the profits fro

wood Auto Group. The midpoint of each class

CHAPTER

2

RedLine

Productions

recently

a new

video game.

playability

to be tested

frequencies

onItsthe

Y-axis.is Recall

that the class

cal analysis.

When developed

she

by 80 veteran game players.

class and represents the typical values in that c

encountered

an

unsanitary

(a) What is the experiment?

of observations in a particular class. The profit

or an

undersup(b) horizontal

What iscondition

oneaxis

possible

outcome?

and

the

class frequencies on the vertical axis. The class frequencies

the

Applewood

Auto

Group

is repeated

belo

(c) are

Suppose

65

of

the

80

players

testing

the

new

game

said they

liked

Is 65

a probability?

plied

hospital,

she

improved

represented by the heights of theby

bars.

However,

there

isit.one

important

differFlorence Nightingale is

A SURVEY OF PROBABILITY CONCEPTS

Statistics in Action articles are scattered throughknown as the founder of

out the text, usually about two per chapter. They

the nursing profession.

provide unique, interesting applications and hisHowever, she also saved

S E L F - R E V I E W 5–1

many lives by using statistitorical insights in the field of statistics.

34

(d)

(e)

The probability

new of

game

beQuantitative

a success is computed

to be −1.0.

Comment.

ence

based

onthat

thethe

nature

the will

data.

data are usually

measured

using

the conditions

and

then

Specifythat

one possible

event. not discrete. Therefore, the horizontal axis represents all

scales

continuous,

Profit

usedare

statistical

data to

possible values, and the bars are drawn adjacent to each other to show the continudocument the improve$ 200 up to $ 600

ous nature of the data.

Midpo

APPROACHES TO ASSIGNING PROBABILITIES

Definitions

LO5-2

ment. Thus, she was able

Assign probabilities using

600 up to 1,000

to convince

others

There are three

ways to

assign

probability to an event: classical,

empirical,

a classical, empirical,66

or

CHAPTER

3 of athe

1,000

up to and

1,400subjecDefinitions of new terms

or terms

unique to tive. The

HISTOGRAM

A graph

in which

the classes

are marked

onare

thebased

horizontal

axis and

classical

empirical

methods

are objective

and

on 1,800

information

subjective

approach.

need forand

medical

reform,

1,400 up to

the class

frequencies

on

theof

vertical

class frequencies

are represented

by

The

subjective

method

is

basedaxis.

on aThe

person’s

belief or estimate

of an event’s

the study of statistics are set apart from the and data.

particularly

in the

area

1,800other.

up to 2,200

the heights of the bars, and the bars are drawn adjacent to each

likelihood.

text and highlighted for easy reference and

sanitation. a.

SheWhat

developed

is the arithmetic mean of the Alaska unemployment

2,200 uprates?

to 2,600

b. Find

median and the mode for the unemployment rates.

review. They also appear in the Glossary at

original graphs

to the

demon2,600

up

to(Dec–Mar)

3,000 months.

c.

Compute

the

arithmetic

mean

and

median

for

just

the

winter

Classical

Probability

strate

that, during

the different?

the end of the book.

Is it much

3,000 up to 3,400

Big Orange

is designing

anoutcomes

information of

system

for use in “in-cab”

more

soldiers

Classical

is based

on the Trucking

assumption

that the

an experiment

are

E Xprobability

ACrimean

M P L22.

EWar,

Total

communications.

It must summarize

data from

eight

siteshappening

throughout aisregion

equally likely.

Using

the

classicalcondiviewpoint,

the probability

of an

event

com-to

died

from

unsanitary

describe typical

conditions.

Compute

appropriate

measure

of month

central location

Below

is the

frequency

distribution

of the

profitsanon

vehicle sales

last

at the for

puted by dividing

the number

of favorable

outcomes

by the

number

of possible outcomes:

theGroup.

variables

wind direction,

temperature,

and

pavement.

tions than

were

killed

in

Applewood

Auto

Formulas

combat.

EXERCIS

Exercises are included after sections within the chapter and at

the end of the chapter. Section

exercises cover the material studied in the section. Many exercises

have data files available to import

into statistical software. They are

indicated with the FILE icon.

Answers to the odd-numbered

exercises are in Appendix D.

City

Wind Direction

40

Birmingham, AL600 up to 1,000

South

Jackson, MS 1,000 up to 1,400

Southwest

32

E X A MCHAPTER

PLE 2

1,400

up

to

1,800

Meridian, MS

South

Monroe, LA 1,800 up to 2,200

Southwest

24

Consider an experiment

of rolling

a six-sided

die.

Tuscaloosa,

AL

Southwest

2,200 up to 2,600

Pavement

Dry

(5–1)

Wet

Wet

Dry

Dry

Trace

Wet

of

Tracethe

11

91

23

92

38

92

93

45

What

is the

93 probability

32

appear

up toface

3,000up”?

19

Eevent

S “an even number of spots2,600

16

up to 3,400

15. Molly’s Candle Shop 3,000

has several

retail stores 4in the coastal areas of North and

8 ask180

South

Carolina.Solution

Many of

Molly’s customers

her to ship their purchases. The folTotal

S O L U T I O Software

N

lowing chart shows the number of packages shipped per day for the last 100 days.

We can use a statistical software package to find many measures of location.

example,are:

the first class shows that there were 5 days when the number of packThe possible For

outcomes

0

400

800

1,200

shipped was

0 up

to 5.

Construct ages

a histogram.

What

observations

can you reach based on the information

1,600

2

X A histogram?

MPLE

presented inE the

Profi

a one-spot

four-spot

Table 2–4

thea profit

on the sales of 180 vehicles at Applewood

30on page 27 shows 28

Auto Group. Determine the mean and23the median selling price.

18

a

two-spot

20

a

five-spot

SOLUTION

13

CHART 2–5 Frequency

Polygon of Profit on 180 Vehicl

10

10

S O LaUthree-spot

TIO

N scaled

5

a six-spot

The class frequencies

are

along the

vertical axis (Y-axis) and

3 either the class

As noted

previously,

$200

up to $600

limits or theThe

class

midpoints

along

horizontal

axis.

To

illustrate

thethe

construction

0 median,

mean,

and the

modal

amounts

of profit

are reported

in the

following

5

10

25

30

35

$400.

To20

construct

ainstructions

frequency

polygon,

mov

of the histogram,

first three

are15shot).

shown

in Chart

2–3.

outputthe

(highlighted

inclasses

the screen

(Reminder:

The

to create

the

Number of Packages

appear in

the Software

Commands

Appendix

C.)

are 180to

vehicles

There are threeoutput

“favorable”

outcomes

(apoint,

two,

a$400,

four,inand

a six)

in There

the

collection

of8, the class

and

then

vertically

in the study, so using a calculator would be tedious and prone to error.

six equally likely possible outcomes. Therefore:

the y values of this point are called the coordin

a. What is this chart called?

are x =Number

800 and

y = 11. outcomes

The process is contin

3 of ←

of favorable

b. What

is the total number

packages

shipped?

32even

ofc.anWhat

number

=

is the

class interval?

connected

in order.

That is,

the point represe

6 ←

Total number

of possible

outcomes

23up to 15 class?

d. What

shipped in the 10

24 is the number=of.5packages

one

representing

the

second

class and so on

e. What is the relative frequency of packages shipped in the 10 up to 15 class?

the

f. What

upfrequency

to 15 class? polygon, midpoints of $0 and $3,

16 is the midpoint of the 10

g. On how many days were there

or 11more packages

shipped?

the25polygon

at zero

frequencies. These two va

Number of Vehicles

(class frequency)

Probability

Computer Output

Temperature

Number of favorable outcomes

Probability

Anniston, AL

89

= Profit West 48 Frequency

ofAtlanta,

an event

GA

Northwest of possible outcomes

86

Total number

$ 200 up to $ 600

8

Augusta, GA

Southwest

92

Frequency

Exercises

CLASSICAL

PROBABILITY

Frequency

Formulas that are used for the first time

are boxed and numbered for reference. In

addition, key formulas are listed in the

back of the text as a reference. 38

$ 40

80

1,20

1,60

2,00

2,40

2,80

3,20

8

Frequency

mutually exclusive

concept appeared earlier in our study of frequency distri8

The text includes many software examples, The

using

16. The following

chart shows the number

of patientsthe

admitted

dailyinterval

to Memorial

subtracting

class

ofHospital

$400 from the

butions in Chapter

2. Recall

that we create

classes so that a particular value is included

through

the

emergency

room. $400

Excel, MegaStat , and Minitab. The software results

are

to

the

highest

midpoint

($3,200)

in only one of the classes and there is no overlap between classes. Thus, only one of in the fre

200

600 Both 1,000

1,400 and the frequency pol

the histogram

illustrated in the chapters. Instructions for a particular

several events can occur at a particular

time.

Profit $characteristics of the data (highs, lows

30

the main

software example are in Appendix C.

the two representations are similar in purpose

each class as a rectangle, with the he

20

depicting

CHART 2–3 Construction

of a Histogram

10

0

Source: Microsoft Excel

Lin87500_ch05_117-154.indd 121

Lin87500_ch02_019-052.indd 34

a.

b.

c.

d.

2

4

6

8

Number of Patients

10

What is the midpoint of the 2 up to 4 class?

On how many days were 2 up to 4 patients admitted?

What is the class interval?

What is this chart called?

12

ix

8/16/17 1:01 PM

17. The following frequency distribution reports the number of frequent flier miles,

reported in thousands, for employees of Brumley Statistical Consulting Inc. during

7/28/17

median sales

price

is, values

and the

median

$60,000.

Why was the developer only reporting

a. Only

two

are

used inisits

calculation.

It is influenced

by extreme

values. important to a person’s decision making

the meanb.price?

This information

is extremely

c. Itaishome.

easy to

computethe

and

to understand.

when buying

Knowing

advantages

and disadvantages of the mean, median,

The variance

is theas

mean

of the squared

from

thestatistical

arithmeticinformation

mean.

andB.mode

is important

we report

statisticsdeviations

and as we

use

to

1. The formula for the population variance is

make decisions.

We also learned how to compute2 measures

Σ(x − μ) 2 of dispersion: range, variance, and

σ =

(3–5)

standard deviation. Each of these statistics

also

N has advantages and disadvantages.

Remember

that

the range

information

2. The

formula

for theprovides

sample variance

is about the overall spread of a distribution. However, it does not provide any information2 about how the data are clustered or

Σ(x − x )

concentrated around the center of the

distribution. As we learn more about statistics,

s2 =

(3–7)

n−1

we need to remember that when we use statistics

we must maintain an independent

3. The major

the variance

are:

and principled

pointcharacteristics

of view. Any of

statistical

report

requires objective and honest coma. of

Allthe

observations

munication

results. are used in the calculation.

H OW DO E S TH I S TE X T R E I N FO RC E

STU D E NT LE A R N I N G?

BY C H A P TE R

CHAPTER

Chapter Summary

Each chapter contains a brief summary

of the chapter material, including vocabulary, definitions, and critical formulas.

44

Pronunciation Key

PRONUNC

This section lists the mathematical symbol,

its meaning, and how to pronounce it. We

believe this will help the student retain the

meaning of the symbol and generally enhance course communications.

Chapter Exercises

b. The units are somewhat difficult to work with; they are the original units squared.

C. The standard deviation is the square root of the variance.

1. The major characteristics of the standard deviation are:

a. It is in the same units as the original data.

S U M M A R b.

Y It is the square root of the average squared distance from the mean.

c. It cannot be negative.

I. A measure

ofthe

location

a value

used tomeasure

describeofthe

central tendency of a set of data.

d. It is

most is

widely

reported

dispersion.

A. The

arithmetic

is sample

the most

widely reported

of location.

2. The

formulamean

for the

standard

deviationmeasure

is

1. It is calculated by adding the values of the observations

and dividing by the total

2

)

Σ(x

−

x

number of observations.

s=

(3–8)

n −of1 ungrouped or raw data is

a. The formula for the population√mean

III. We use the standard deviation to describe

Σx a frequency distribution by applying

(3–1)

=

Chebyshev’s theorem or the EmpiricalμRule.

N

A. Chebyshev’s

theorem

states

that mean

regardless

of the shape of the distribution, at least

b. The

formula

for the

sample

is

2

1 − 1/k of the observations will be within k standard deviations of the mean, where k

Σx

is greater than 1.

x=

(3–2)

n

B. The Empirical Rule states that for a bell-shaped

distribution about 68% of the values

2.

the arithmetic

willThe

be major

within characteristics

one standard of

deviation

of the mean

mean,are:

95% within two, and virtually all

a. At

least the interval scale of measurement is required.

within

three.

b. All the data values are used in the calculation.

c. A set of data has only one mean. That is, it is unique.

d. The sum of the deviations from the mean equals 0.

CHAPTER 2

B. The median is the value in the middle of a set of ordered data.

1.

To

I A T I O N K E find

Y the median, sort the observations from minimum to maximum and identify

the middle value.

B. The

class

frequency

is the number

observations

in each class.

2. The

major

characteristics

of the of

median

are:

SYMBOL

MEANING

PRONUNCIATION

C. The class

interval

is

the difference

between the limits

of two consecutive classes.

At least

the

ordinal

scale

of measurement

is required.

μ D. Thea.class

Population

mean

mu

midpoint

is

halfway

between

the

limits

of

consecutive

classes.

b. It is not influenced by extreme values.

Σ A relative

Operation

of shows

addingtheare

sigma

VI.

frequency

distribution

percent

observations

in each

class.

c. Fifty

percent

of the observations

largerofthan

the median.

VII.

There

are

several

methods

for

graphically

portraying

a

frequency

distribution.

Σx

a of

group

sigma x

d. It is uniqueAdding

to a set

data.of values

A.

A

histogram

portrays

the

frequencies

in often

the form

of

a of

rectangle

or bar for each class.

C.

The

mode

is

the

value

that

occurs

most

in

a

set

data.

x

Sample mean

x bar

The

height

of the

is proportional

the class frequencies.

1. The

mode

canrectangles

be found for

nominal-leveltodata.

x w B. A frequency polygon

Weighted

mean line segments connecting the points

x bar

sub by

w the

consists

formed

2. A set of data can have

moreofthan

one mode.

2

intersection of the

class midpoint

and the class frequency.

Population

variance

sigma squared

σ

C.

A

graph

of

a

cumulative

frequency

distribution

shows

the

number

of

observations

less

σ

Population standard deviation

sigma

than a given value.

D. A graph of a cumulative relative frequency distribution shows the percent of observations less than a given value.

CHAPTER EXERCISES

Lin87500_ch03_053-087.indd 81

Generally, the end-of-chapter exercises

are the most challenging and integrate

the chapter concepts. The answers and

worked-out solutions for all oddnumbered exercises are in Appendix D

at the end of the text. Many exercises

are noted with a data file icon in the margin. For these exercises, there are data

files in Excel format located in C

onnect.

These files help students use statistical

software to solve the exercises.

Data Analytics

The goal of the Data Analytics sections is to develop analytical skills.

The exercises present a real-world

context with supporting data. The data

sets are printed in Appendix A and

available to download from Connect.

Statistical software is required to analyze

the data and respond to the exercises.

Each data set is used to explore questions and discover findings that relate to

a real-world context. For each business

context, a story is uncovered as students

progress from chapter 1 to 15.

x

Lin87500_ch03_053-087.indd 82

23. Describe the similarities and differences of qualitative and quantitative variables.

Be 10:42 AM

9/20/17

sure to include the following:

a. What level of measurement is required for each variable type?

9/20/17

b. Can both types be used to describe both samples and populations?

24. Describe the similarities and differences between a frequency table and a frequency

distribution. Be sure to include which requires qualitative data and which requires quantitative data.

25. Alexandra Damonte will be building a new resort in Myrtle Beach, South Carolina. She

must decide how to design the resort based on the type of activities that the resort will

offer to its customers. A recent poll of 300 potential customers showed the following

results about customers’ preferences for planned resort activities:

Like planned activities

Do not like planned activities

Not sure

No answer

10:42 AM

63

135

78

24

a.

b.

c.

d.

What is the table called?

Draw a bar chart to portray the survey results.

Draw a pie chart for the survey results.

If you are preparing to present the results to Ms. Damonte as part of a report, which

graph would you prefer to show? Why?

Speedy Swift is a package delivery service that serves the greater Atlanta, Georgia,

26.

metropolitan area. To maintain customer loyalty, one of Speedy Swift’s performance

DESCRIBING DATA: FREQUENCYobjectives

TABLES, FREQUENCY

DISTRIBUTIONS,

AND GRAPHIC

PRESENTATION

is on-time delivery.

To monitor its performance,

each

delivery is measured 51

on

the following scale: early (package delivered before the promised time), on-time (package delivered within 15 minutes of the promised time), late (package delivered more

than 15 minutes past the promised time), or lost (package never delivered). Speedy

D A T A A N A L Y T I C S Swift’s objective is to deliver 99% of all packages either early or on-time. Speedy collected the following data for last month’s performance:

(The data for these exercises are available in Connect.)

On-time

Early

Early

Early

On-time

On-time

Early

On-time

On-time

On-time

Lin87500_ch02_019-052.indd 44

On-time

On-time

On-time

On-time

Late

Late

Early

On-time

Early

On-time

Late

On-time

On-time

On-time

On-time

Late on homes

On-time

51.Early

Refer

to the North

Valley Real

Estate data,

which report

information

sold

On-time

On-time

On-time

On-time

On-time class

On-time

On-time

during theEarly

last year. For

the variable

price, select

an appropriate

interval and

orgaEarly

On-time prices

On-time

On-time distribution.

Early

On-time

On-time summarizing

On-time

nize the selling

into a frequency

Write

a brief report

On-time

Late Be sureEarly

On-time

On-time

Early

your findings.

to answer Early

the following

questionsOn-time

in your report.

Late

On-time

On-time

On-time

On-time

On-time

On-time

a. AroundOn-time

what values

of price do

the data tend

to cluster?

Early

Early distribution,

On-time whatLost

On-time

On-time

On-time

b. BasedOn-time

on the frequency

is the typical

selling price

in the first

class?

On-timeWhat isOn-time

Early

On-time

On-time

On-time

the typicalLate

selling price

in the lastLost

class?

Early

On-time

Early

On-time

Early

On-time

Late

On-time

c. Draw a cumulative relative frequency distribution. Using this distribution, fifty

On-timepercent

On-time

On-time

Late

On-time

Early

of the homes

sold for

what price

or less? Estimate

theOn-time

lower priceOn-time

of the

On-timetop tenOn-time

Early

Earlypercent of

On-time

On-time

On-time

percent ofOn-time

homes sold.

About what

the homes

sold for less

than

$300,000?

d. Refer to the variable bedrooms. Draw a bar chart showing the number of homes sold

with 2, 3, or 4 or more bedrooms. Write a description of the distribution.

Refer to the Baseball 2016 data that report information on the 30 Major League

52.

Baseball teams for the 2016 season. Create a frequency distribution for the Team Salary

variable and answer the following questions.

a. What is the typical salary for a team? What is the range of the salaries?

b. Comment on the shape of the distribution. Does it appear that any of the teams have

a salary that is out of line with the others?

c. Draw a cumulative relative frequency distribution of team salary. Using this distribution, forty percent of the teams have a salary of less than what amount? About how

many teams have a total salary of more than $220 million?

Refer to the Lincolnville School District bus data. Select the variable referring to

53.

the number of miles traveled since the last maintenance, and then organize these data

into a frequency distribution.

a. What is a typical amount of miles traveled? What is the range?

b. Comment on the shape of the distribution. Are there any outliers in terms of miles

driven?

c. Draw a cumulative relative frequency distribution. Forty percent of the buses

were driven fewer than how many miles? How many buses were driven less than

10,500 miles?

d. Refer to the variables regarding the bus manufacturer and the bus capacity. Draw a

9/20/17 9:26 AM

53.

Practice Test

many teams have a total salary of more than $220 million?

Refer to the Lincolnville School District bus data. Select the variable referring to

the number of miles traveled since the last maintenance, and then organize these data

into a frequency distribution.

a. What is a typical amount of miles traveled? What is the range?

b. Comment on the shape of the distribution. Are there any outliers in terms of miles

driven?

c. Draw a cumulative relative frequency distribution. Forty percent of the buses

were driven fewer than how many miles? How many buses were driven less than

10,500 miles?

d. Refer to the variables regarding the bus manufacturer and the bus capacity. Draw a

pie chart of each variable and write a description of your results.

PRACTICE TEST

The Practice Test is intended to

give students an idea of content

that might appear on a test and

how the test might be structured.

The Practice Test includes both

objective questions and problems

covering the material studied in

the section.

Part 1—Objective

1. A grouping of qualitative data into mutually exclusive classes showing the number of observations in each class is

15–2. The MegaStat commands to cre

.

known as a

of-fitin

test

on class

pageis483 are:

2. A grouping of quantitative data into mutually exclusive classes showing the number of observations

each

a. Enter the information from T

.

known as a

shown. (propor3. A graph in which the classes for qualitative data are reported on the horizontal axis and the class frequencies

.

tional to the heights of the bars) on the vertical axis is called a

b. Select MegaStat, Chi-Squar

4. A circular chart that shows the proportion or percentage that each class represents of the total is calledFit

a Test, and. hit Enter.

5. A graph in which the classes of a quantitative variable are marked on the horizontal axis and the class

c. Infrequencies

the dialogon

box, select B2

the vertical axis is called a

.

C2:C5 as the Expected valu

6. A set of data included 70 observations. How many classes would you suggest to construct a frequency

distribution?estimated fro

of parameters

7.

8.

9.

10.

The distance between successive lower class limits is called the

.

The average of the respective class limits of two consecutive classes is the class

In a relative frequency distribution, the class frequencies are divided by the

A cumulative frequency polygon is created by line segments connecting the class

sponding cumulative frequencies.

.

.

and the corre-

CHAPTER 14

A PPE N D IX M ATE R IA L

Software Commands

Lin87500_ch02_019-052.indd 51

Software examples using Excel, MegaStat,

and Minitab are included throughout the

text. The explanations of the computer

input commands are placed at the end of

the text in Appendix C.

Note: We do not show steps for all the statistical software in Chapter 14.

The following shows the basic steps.

14–1. The Excel commands to produce the multiple regression output on page 422 are:

a. Import the data from Connect. The file name is Tbl14.

b. Select the Data tab on the top menu. Then on the far right,

select Data Analysis. Select Regression and click OK.

c. Make the Input Y Range A1:A21, the Input X Range

B1:D21, check the Labels box, the Output Range is F1,

then click OK.

15–3. The MegaStat commands to cre

7/28/17 7:44 AM

of-fit tests on pages 488 and 48

number of items in the observe

umns. Only one dialog box is sh

a. Enter the Levels of Manag

page 488.

b. Select MegaStat, Chi-Squar

Fit Test, and hit Enter.

c. In the dialog box, select B1

C1:C7 as the Expected valu

of parameters estimated fro

A PPE N D IX E : A N SWE RS TO S E LF - RE V I E W

CHAPTER 1

c. Class frequencies.

15–4. The MegaStat commands for the

d. The largest concentration of commissions is $1,500

1–1 a. Inferential statistics, because a sample was used to draw a

page up

493toare:

CHAPTER

15

$1,600.

The

smallest

commission

is

about

$1,400

the

conclusion about how all consumers in the population

a. and

Enter

Table 15–5 on page

15–1. The MegaStat commands

two-sample

testThe

of proporlargestforisthe

about

$1,800.

typical amount earned

is the row and colum

Include

would react if the chicken dinner were marketed.

tions on page 477 are:

Total

column

or row.

$1,550.

b. On the basis of the sample of 1,960 consumers, we estia. Select MegaStat from

the Add-Ins tab. From the menu,

se6

b. Select

2–3 a. 2Tests,

= and

64 then

< 73

< 128 = 2 7 , so seven classes

areMegaStat from the

mate that, if it is marketed, 60% of all consumers will pur- lect Hypothesis

Compare Two Indepenselect Chi-square/Crossta

recommended.

chase the chicken dinner: (1,176/1,960) × 100 = 60%.

dent Proportions.

Table.

b. For

TheGroup

interval

width

should

benat

= 24.

1–2 a. Age is a ratio-scale variable. A 40-year-old is twice as old

b. Enter the data.

1, enter

x as

19 and

asleast

100. (488 − 320)/7

c. For the Input range, select c

The worked-out

solutions to the Self-Reviews are For Group 2, enter

Class

25 orOK.

30 are reasonable.

x asintervals

62 and n of

as either

200. Select

as someone 20 years old.

chi-square and Expected va

provided

at the

of the

text

in Appendix

E. car, and

c. Assuming a class interval of 25 and beginning with a lower

b. The

two end

variables

are: 1)

if a person

owns a luxury

limit of 300, eight classes are required. If we use an interval

2) the state of residence. Both are measured on a nominal scale.

of 30 and begin with a lower limit of 300, only seven classes

CHAPTER 2

are required. Seven classes is the better alternative.

2–1 a. Qualitative data, because the customers’ response to the

taste test is the name of a beverage.

Distance Classes

Frequency

Percent

b. Frequency table. It shows the number of people who prefer

300 up to 330

2

2.7%

each beverage.

c.

330 up to 360

2

2.7

360 up to 390

17

23.3

390 up to 420

27

37.0

40

420 up to 450

22

30.1

450 up to 480

1

1.4

30

480 up to 510

2

2.7

Grand Total

20

10

0

Cola-Plus Coca-Cola

73

100.00

d. 17

e. 23.3%, found by 17/73

f. 71.2%, found by (27 + 22 + 1 + 2)/73

2–4 a.

Lin87500_appc_526-533.indd 533

Pepsi

Beverage

20

Lemon-Lime

f

Frequency

Answers to Self-Review

20

xi

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▪ If you’re looking for some guidance on how to use Connect, or want to learn

tips and tricks from super users, you can find tutorials as you work. Our Digital

Faculty Consultants and Student Ambassadors offer insight into how to achieve

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www.mheducation.com/connect

A D D ITI O N A L R E SOU RC E S

INSTRUCTOR LIBRARY

The McGraw-Hill Education Connect Business Statistics Instructor Library is your repository for additional resources

to improve student engagement in and out of class. You can select and use any asset that enhances your lecture,

including:

• Solutions Manual The Solutions Manual, carefully revised by the authors, contains solutions to all basic, intermediate, and challenge problems found at the end of each chapter.

• Test Bank The Test Bank, revised by Wendy Bailey of Troy University, contains hundreds of true/false, multiple

choice, and short-answer/discussions, updated based on the revisions of the authors. The level of difficulty

varies, as indicated by the easy, medium, and difficult labels.

• PowerPoint Presentations Prepared by Stephanie Campbell of Mineral Area College, the presentations contain exhibits, tables, key points, and summaries in a visually stimulating collection of slides.

• Excel Templates There are templates for various end-of-chapter problems that have been set as Excel

spreadsheets—all denoted by an icon. Students can easily download and save the files and use the data to

solve end-of-chapter problems.

MEGASTAT® FOR MICROSOFT EXCEL®

MegaStat by J. B. Orris of Butler University is a full-featured Excel statistical analysis add-in that is available on the

MegaStat website at www.mhhe.com/megastat (for purchase). MegaStat works with recent versions of Microsoft Excel

(Windows and Mac OS X). See the website for details on supported versions.

Once installed, MegaStat will always be available on the Excel add-ins ribbon with no expiration date or data limitations. MegaStat performs statistical analyses within an Excel workbook. When a MegaStat menu item is selected, a

dialog box pops up for data selection and options. Since MegaStat is an easy-to-use extension of Excel, students

can focus on learning statistics without being distracted by the software. Ease-of-use features include Auto Expand

for quick data selection and Auto Label detect.

MegaStat does most calculations found in introductory statistics textbooks, such as computing descriptive statistics,

creating frequency distributions, and computing probabilities, as well as hypothesis testing, ANOVA, chi-square

analysis, and regression analysis (simple and multiple). MegaStat output is carefully formatted and appended to an

output worksheet.

Video tutorials are included that provide a walk-through using MegaStat for typical business statistics topics. A context-sensitive help system is built into MegaStat, and a User’s Guide is included in PDF format.

MINITAB®/SPSS®/JMP®

Minitab Version 17, SPSS Student Version 18.0, and

JMP Student Edition Version 8 are software products

that are available to help students solve the exercises

with data files. Each software product can be packaged

with any McGraw-Hill business statistics text.

xiv

AC KN OWLE DG M E NTS

This edition of Basic Statistics for Business and Economics is the product of many people: students, colleagues, reviewers, and the

staff at McGraw-Hill Education. We thank them all. We wish to express our sincere gratitude to the reviewers:

Stefan Ruediger

Arizona State University

Golnaz Taghvatalab

Central Michigan University

Anthony Clark

St. Louis Community College

John Yarber

Northeast Mississippi Community

College

Umair Khalil

West Virginia University

John Beyers

University of Maryland

Leonie Stone

SUNY Geneseo

Mohammad Kazemi

University of North Carolina

Charlotte

Anna Terzyan

Loyola Marymount University

Lee O. Cannell

El Paso Community College

Their suggestions and thorough reviews of the previous edition and the manuscript of this edition make this a better text.

Special thanks go to a number of people. Shelly Moore, College of Western Idaho, and John

Arcaro, Lakeland Community College, accuracy checked the Connect exercises. Ed Pappanastos, Troy

University, built new data sets and revised SmartBook. Rene Ordonez, Southern Oregon University,

built the Connect guided examples. Wendy Bailey, Tory University, prepared the test bank. Stephanie

Campbell, Mineral Area College, prepared the PowerPoint decks. Vickie Fry, Westmoreland County

Community College, provided countless hours of digital accuracy checking and support.

We also wish to thank the staff at McGraw-Hill Education. This includes Noelle Bathurst, Portfolio

Manager; Michele Janicek, Lead Product Developer; Ryan McAndrews, Product Developer; Lori Koetters,

Content Project Manager; Daryl Horrocks, Program Manager; and others we do not know personally, but

who have made valuable contributions.

xv

xvi

CONTENTS

EN

H A N C E M E NTS TO

BA S I C STATI STI C S

FO R BUS I N E S S & E CO N O M I C S , 9 E

CHANGES MADE TO INDIVIDUAL CHAPTERS

• New contingency table in Exercise 31.

CHAPTER 1 What Is Statistics?

• Revised Example/Solution demonstrating the combination

formula.

• Revised Self-Review 1–2.

• New Data Analytics section with new data and questions.

• New section describing business analytics and its integration

with the text.

CHAPTER 6 Discrete Probability Distributions

• Updated Exercises 2, 3, 17, and 19.

• Expanded discussion of random variables.

• New photo and chapter opening exercise.

• Revised the Example/Solution in the section on Poisson

distribution.

• New introduction with new graphic showing the increasing

amount of information collected and processed with new

technologies.

• Updated Exercise 18 and added new Exercises 54, 55, and 56.

• Revised the section on the binomial distribution.

• New ordinal scale example based on rankings of states by

business climate.

• Revised Example/Solution demonstrating the binomial

distribution.

• The chapter includes several new examples.

• New exercise using a raffle at a local golf club to demonstrate

probability and expected returns.

• Chapter is more focused on the revised learning objectives,

improving the chapter’s flow.

• Revised Exercise 17 is based on economic data.

• New Data Analytics section with new data and questions.

• New Data Analytics section with new data and questions.

CHAPTER 7 Continuous Probability Distributions

• Revised Self-Review 7–1.

CHAPTER 2 Describing Data: Frequency Tables,

Frequency Distributions, and Graphic Presentation

• Revised the Example/Solutions using Uber as the context.

• Revised chapter introduction.

• Updated Statistics in Action.

• Added more explanation about cumulative relative frequency

distributions.

• Revised Self-Review 7–2 based on daily personal water

consumption.

• Updated Exercises 38, 45, 47, and 48 using real data.

• Revised Self-Review 2–3 to include data.

• Revised explanation of the Empirical Rule as it relates to the

normal distribution.

• New Data Analytics section with new data and questions.

• New Data Analytics section with new data and questions.

CHAPTER 3 Describing Data: Numerical Measures

CHAPTER 8 Sampling Methods and the Central

Limit Theorem

• Updated Self-Review 3–2.

• Reorganized chapter based on revised learning objectives.

• Replaced the mean deviation with more emphasis on the

variance and standard deviation.

• Updated Statistics in Action.

• New Data Analytics section with new data and questions.

• Updated Exercises 19, 22, 28, 37, and 48.

• New example of simple random sampling and the application

of the table of random numbers.

• The discussions of systematic random, stratified random, and

cluster sampling have been revised.

• Revised Exercise 44 based on the price of a gallon of milk.

• New Data Analytics section with new data and questions.

CHAPTER 4 Describing Data: Displaying and

Exploring Data

CHAPTER 9 Estimation and Confidence Intervals

• Updated Exercise 22 with 2016 New York Yankee player

salaries.

• Updated Exercises 5, 6, 12, 14, 24, 37, 39, and 55.

• New Data Analytics section with new data and questions.

CHAPTER 5 A Survey of Probability Concepts

• Updated Exercises 39 and 52 using real data.

• New Self-Review 9–3 problem description.

• New Statistics in Action describing EPA fuel economy.

• New separate section on point estimates.

• Integration and application of the central limit theorem.

• New explanation of odds compared to probabilities.

• A revised simulation demonstrating the interpretation of confidence level.

• New Exercise 21.

• New presentation on using the t table to find z values.

• New Example/Solution for demonstrating contingency tables

and tree diagrams.

• A revised discussion of determining the confidence interval

for the population mean.

xvi

• Expanded section on calculating sample size.

CHAPTER 13 Correlation and Linear Regression

• New Data Analytics section with new data and questions.

• Added new conceptual formula to relate the standard error to

the regression ANOVA table.

CHAPTER 10 One-Sample Tests of Hypothesis

• Revised the Example/Solutions using an airport cell phone

parking lot as the context.

• Revised software solution and explanation of p-values.

• Conducting a test of hypothesis about a population proportion is moved to Chapter 15.

• New example introducing the concept of hypothesis

testing.

• Sixth step added to the hypothesis testing procedure emphasizing the interpretation of the hypothesis test results.

• New Data Analytics section with new data and questions.

CHAPTER 11 Two-Sample Tests of Hypothesis

• Updated Exercises 41 and 57.

• Rewrote the introduction section to the chapter.

• The data used as the basis for the North American Copier

Sales Example/Solution used throughout the chapter have

been changed and expanded to 15 observations to more

clearly demonstrate the chapter’s learning objectives.

• Revised section on transforming data using the economic

relationship between price and sales.

• New Exercises 35 (transforming data), 36 (Masters prizes and

scores), 43 (2012 NFL points scored versus points allowed),

44 (store size and sales), and 61 (airline distance and fare).

• New Data Analytics section with new data and questions.

• Updated Exercises 5, 9, 30, and 44.

CHAPTER 14 Multiple Regression Analysis

• New introduction to the chapter.

• Updated Exercises 19, 22, and 25.

• Section of two-sample tests about proportions moved to

Chapter 15.

• Rewrote the section on evaluating the multiple regression

equation.

• Changed subscripts in Example/Solution for easier

understanding.

• More emphasis on the regression ANOVA table.

• New Data Analytics section with new data and questions.

• More emphasis on calculating the variance inflation factor to

evaluate multicollinearity.

CHAPTER 12 Analysis of Variance

• Revised Self-Reviews 12–1 and 12–3.

• Enhanced the discussion of the p-value in decision making.

• New Data Analytics section with new data and questions.

• New introduction to the chapter.

CHAPTER 15 Nonparametric Methods: NominalLevel Hypothesis Tests

• New Exercise 16 using the speed of browsers to search the

Internet.

• Updated the context of Manelli Perfume Company Example/

Solution.

• Revised Exercise 25 comparing learning in traditional versus

online courses.

• Revised the “Hypothesis Test of Unequal Expected Frequencies” Example/Solution.

• New section on comparing two population variances.

• Moved one-sample and two-sample tests of proportions from

Chapters 10 and 11 to Chapter 15.

• Updated Exercises 10, 16, 25, and 30.

• New example illustrating the comparison of variances.

• Revised the names of the airlines in the one-way ANOVA

example.

• New example introducing goodness-of-fit tests.

• Changed the subscripts in Example/Solution for easier

understanding.

• Revised section on contingency table analysis with a new

Example/Solution.

• New Data Analytics section with new data and questions.

• New Data Analytics section with new data and questions.

• Removed the graphical methods to evaluate normality.

xvii

BRIEF CONTENTS

1 What is Statistics? 1

2 Describing Data: Frequency Tables, Frequency Distributions,

and Graphic Presentation

19

3 Describing Data: Numerical Measures 53

4 Describing Data: Displaying and Exploring Data 88

5 A Survey of Probability Concepts 117

6 Discrete Probability Distributions 155

7 Continuous Probability Distributions 184

8 Sampling Methods and the Central Limit Theorem

9 Estimation and Confidence Intervals 242

10 One-Sample Tests of Hypothesis 274

11 Two-Sample Tests of Hypothesis 305

12 Analysis of Variance 334

13 Correlation and Linear Regression 365

14 Multiple Regression Analysis 418

15 Nonparametric Methods:

Nominal-Level Hypothesis Tests

469

Appendixes:

Data Sets, Tables, Software Commands, Answers

Glossary

Index

210

503

578

581

xix

CONTENTS

A Note from the Authors

Preface vii

vi

Cumulative Distributions 39

1What is Statistics?

E X E RC ISE S 42

1

Chapter Summary 43

Introduction 2

Chapter Exercises 44

Why Study Statistics? 2

Data Analytics 51

What is Meant by Statistics? 3

Practice Test 51

Types of Statistics 4

Descriptive Statistics 4

Inferential Statistics 5

Types of Variables 6

Levels of Measurement 7

Nominal-Level Data 7

Ordinal-Level Data 8

Interval-Level Data 9

Ratio-Level Data 10

EX ERC I SES 11

3Describing Data:

NUMERICAL MEASURES

53

Introduction 54

Measures of Location 54

The Population Mean 55

The Sample Mean 56

Properties of the Arithmetic Mean 57

Ethics and Statistics 12

E X E RC ISE S 58

Basic Business Analytics 12

The Median 59

The Mode 61

Chapter Summary 13

Chapter Exercises 14

E X E RC ISE S 63

Data Analytics 17

The Relative Positions of the Mean,

Median, and Mode 64

Practice Test 17

E X E RC ISE S 65

Software Solution 66

2Describing Data:

FREQUENCY TABLES, FREQUENCY

DISTRIBUTIONS, AND GRAPHIC

PRESENTATION 19

E X E RC ISE S 68

Why Study Dispersion? 68

Introduction 20

Range 69

Variance 70

Constructing Frequency Tables 20

E X E RC ISE S 72

Relative Class Frequencies 21

Graphic Presentation

of Qualitative Data 22

EX ERC I SES 26

Constructing Frequency Distributions 27

Relative Frequency Distribution 31

EX ERC I SES 32

Graphic Presentation of a Distribution 33

xx

The Weighted Mean 67

Population Variance 73

Population Standard Deviation 75

E X E RC ISE S 75

Sample Variance and Standard

Deviation 76

Software Solution 77

E X E RC ISE S 78

Interpretation and Uses of the Standard

Deviation 78

Histogram 33

Frequency Polygon 36

Chebyshev’s Theorem 78

The Empirical Rule 79

EX ERC I SES 38

E X E RC ISE S 80

xxi

CONTENTS

Ethics and Reporting Results 81

Chapter Summary 81

Pronunciation Key 82

Chapter Exercises 83

Data Analytics 86

Rules of Multiplication

to Calculate Probability 132

Special Rule of Multiplication 132

General Rule of Multiplication 133

Contingency Tables 135

Tree Diagrams 138

Practice Test 86

E X E RC ISE S 140

4Describing Data:

DISPLAYING AND EXPLORING DATA 88

Introduction 89

Principles of Counting 142

The Multiplication Formula 142

The Permutation Formula 143

The Combination Formula 145

E X E RC ISE S 147

Dot Plots 89

EXER C ISES 91

Chapter Summary 147

Measures of Position 92

Pronunciation Key 148

Quartiles, Deciles, and Percentiles 92

Chapter Exercises 148

EXER C ISES 96

Data Analytics 153

Practice Test 154

Box Plots 96

EXER C ISES 99

Skewness 100

EXER C ISES 103

Describing the Relationship between

Two Variables 104

Contingency Tables 106

EXER C ISES 108

Chapter Summary 109

Pronunciation Key 110

Chapter Exercises 110

Data Analytics 115

6Discrete Probability

Distributions 155

Introduction 156

What is a Probability Distribution? 156

Random Variables 158

Discrete Random Variable 159

Continuous Random Variable 160

The Mean, Variance, and Standard Deviation of a

Discrete Probability Distribution 160

Mean 160

Variance and Standard Deviation 160

Practice Test 115

E X E RC ISE S 162

5A Survey of Probability

Concepts 117

Binomial Probability Distribution 164

Introduction 118

How is a Binomial Probability

Computed? 165

Binomial Probability Tables 167

What is a Probability? 119

E X E RC ISE S 170

Approaches to Assigning Probabilities 121

Cumulative Binomial Probability

Distributions 171

Classical Probability 121

Empirical Probability 122

Subjective Probability 124

EXER C ISES 125

Rules of Addition for Computing

Probabilities 126

Special Rule of Addition 126

Complement Rule 128

The General Rule of Addition 129

EXER C ISES 131

E X E RC ISE S 172

Poisson Probability Distribution 173

E X E RC ISE S 178

Chapter Summary 178

Chapter Exercises 179

Data Analytics 183

Practice Test 183

xxiiCONTENTS

7Continuous Probability

Distributions 184

Introduction 185

Introduction 243

The Family of Uniform Probability

Distributions 185

Point Estimate for a Population Mean 243

EX ERC I SES 188

The Family of Normal Probability

Distributions 189

The Standard Normal Probability

Distribution 192

Applications of the Standard Normal

Distribution 193

The Empirical Rule 193

EX ERC I SES 195

Finding Areas under the Normal Curve 196

EX ERC I SES 199

EX ERC I SES 201

EX ERC I SES 204

Chapter Summary 204

Chapter Exercises 205

Data Analytics 208

Practice Test 209

8Sampling Methods and the

Central Limit Theorem 210

Introduction 211

Sampling Methods 211

Reasons to Sample 211

Simple Random Sampling 212

Systematic Random Sampling 215

Stratified Random Sampling 215

Cluster Sampling 216

EX ERC I SES 217

Sampling “Error” 219

Sampling Distribution of the Sample

Mean 221

EX ERC I SES 224

The Central Limit Theorem 225

EX ERC I SES 231

Using the Sampling Distribution of the

Sample Mean 232

EX ERC I SES 234

Chapter Summary 235

Pronunciation Key 236

9Estimation and Confidence

Intervals 242

Confidence Intervals for a Population Mean 244

Population Standard Deviation, Known σ 244

A Computer Simulation 249

E X E RC ISE S 251

Population Standard Deviation, σ Unknown 252

E X E RC ISE S 259

A Confidence Interval for a Population

Proportion 260

E X E RC ISE S 263

Choosing an Appropriate Sample Size 263

Sample Size to Estimate a Population Mean 264

Sample Size to Estimate a Population

Proportion 265

E X E RC ISE S 267

Chapter Summary 267

Chapter Exercises 268

Data Analytics 272

Practice Test 273

10One-Sample Tests

of Hypothesis 274

Introduction 275

What is Hypothesis Testing? 275

Six-Step Procedure for Testing a Hypothesis 276

Step 1: State the Null Hypothesis (H0) and the

Alternate Hypothesis (H1) 276

Step 2: Select a Level of Significance 277

Step 3: Select the Test Statistic 279

Step 4: Formulate the Decision Rule 279

Step 5: Make a Decision 280

Step 6: Interpret the Result 280

One-Tailed and Two-Tailed Hypothesis Tests 281

Hypothesis Testing for a Population Mean: Known

Population Standard Deviation 283

A Two-Tailed Test 283

A One-Tailed Test 286

p-Value in Hypothesis Testing 287

E X E RC ISE S 289

Hypothesis Testing for a Population Mean:

Population Standard Deviation Unknown 290

Chapter Exercises 236

E X E RC ISE S 295

Data Analytics 241

A Statistical Software Solution 296

Practice Test 241

E X E RC ISE S 297

xxiii

CONTENTS

13Correlation and

Linear Regression

Chapter Summary 299

Pronunciation Key 299

Chapter Exercises 300

365

Introduction 366

Data Analytics 303

What is Correlation Analysis? 366

Practice Test 303

The Correlation Coefficient 369

E X E RC ISE S 374

11Two-Sample Tests

of Hypothesis 305

Testing the Significance of the Correlation

Coefficient 376

E X E RC ISE S 379

Introduction 306

Two-Sample Tests of Hypothesis: Independent

Samples 306

EXER C ISES 311

Comparing Population Means with Unknown

Population Standard Deviations 312

Regression Analysis 380

Least Squares Principle 380

Drawing the Regression Line 383

E X E RC ISE S 386

Testing the Significance of the Slope 388

E X E RC ISE S 390

Two-Sample Pooled Test 312

Evaluating a Regression Equation’s

Ability to Predict 391

EXER C ISES 316

Two-Sample Tests of Hypothesis:

Dependent Samples 318

The Standard Error of Estimate 391

The Coefficient of Determination 392

Comparing Dependent

and Independent Samples 321

E X E RC ISE S 393

Relationships among the Correlation

Coefficient, the Coefficient of

Determination, and the Standard

Error of Estimate 393

EXER C ISES 324

Chapter Summary 325

Pronunciation Key 326

Chapter Exercises 326

E X E RC ISE S 395

Data Analytics 332

Interval Estimates of Prediction 396

Practice Test 332

12Analysis of Variance

334

Introduction 335

Assumptions Underlying Linear

Regression 396

Constructing Confidence and Prediction

Intervals 397

E X E RC ISE S 400

Comparing Two Population Variances 335

The F Distribution 335

Testing a Hypothesis of Equal Population

Variances 336

EXER C ISES 339

ANOVA: Analysis of Variance 340

ANOVA Assumptions 340

The ANOVA Test 342

EXER C ISES 349

Inferences about Pairs of Treatment Means 350

EXER C ISES 352

Chapter Summary 354

Pronunciation Key 355

Chapter Exercises 355

Data Analytics 362

Transforming Data 400

E X E RC ISE S 403

Chapter Summary 404

Pronunciation Key 406

Chapter Exercises 406

Data Analytics 415

Practice Test 416

14Multiple Regression

Analysis 418

Introduction 419

Multiple Regression Analysis 419

E X E RC ISE S 423

Evaluating a Multiple Regression Equation 425

Practice Test 363

The ANOVA Table 425

xxivCONTENTS

Multiple Standard Error of Estimate 426

Coefficient of Multiple Determination 427

Adjusted Coefficient of Determination 428

Goodness-of-Fit Tests: Comparing Observed and

Expected Frequency Distributions 479

Hypothesis Test of Equal Expected

Frequencies 479

EX ERC I SES 429

E X E RC ISE S 484

Inferences in Multiple Linear Regression 429

Global Test: Testing the Multiple

Regression Model 429

Evaluating Individual Regression Coefficients 432

EX ERC I SES 435

Evaluating the Assumptions of Multiple

Regression 436

Linear Relationship 437

Variation in Residuals Same for Large

and Small ŷ Values 438

Distribution of Residuals 439

Multicollinearity 439

Independent Observations 441

Qualitative Independent Variables 442

Hypothesis Test of Unequal Expected

Frequencies 486

Limitations of Chi-Square 487

E X E RC ISE S 489

Contingency Table Analysis 490

E X E RC ISE S 493

Chapter Summary 494

Pronunciation Key 495

Chapter Exercises 495

Data Analytics 500

Practice Test 501

Stepwise Regression 445

EX ERC I SES 447

Review of Multiple Regression 448

Chapter Summary 454

APPENDIXES 503

Appendix A: Data Sets 504

Pronunciation Key 455

Appendix B: Tables 513

Chapter Exercises 456

Appendix C: Software Commands 526

Data Analytics 466

Appendix D: Answers to Odd-Numbered

Chapter Exercises 534

Practice Test 467

15Nonparametric Methods:

NOMINAL-LEVEL HYPOTHESIS

TESTS 469

Introduction 470

Test a Hypothesis of a Population

Proportion 470

EX ERC I SES 473

Two-Sample Tests about Proportions 474

EX ERC I SES 478

Solutions to Practice Tests 566

Appendix E: Answers to Self-Review 570

Glossary 578

Index 581

Key Formulas

Student’s t Distribution

Areas under the Normal Curve

for Business

& Economics

Ninth Edition

LIND MARCHAL WATHEN

Basic Statistics for

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Basic Statistics for

BUSINESS &

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NINTH EDITION

DOUGLAS A. LIND

Coastal Carolina University and The University of Toledo

WILLIAM G. MARCHAL

The University of Toledo

SAMUEL A. WATHEN

Coastal Carolina University

BASIC STATISTICS FOR BUSINESS AND ECONOMICS, NINTH EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2019 by

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Title: Basic statistics for business and economics / Douglas A. Lind, Coastal

Carolina University and The University of Toledo, William G. Marchal, The

University of Toledo, Samuel A. Wathen, Coastal Carolina Universit.

Description: Ninth edition. | New York, NY : McGraw-Hill Education, [2019]

Identifiers: LCCN 2017034976 | ISBN 9781260187502 (alk. paper)

Subjects: LCSH: Social sciences—Statistical methods. |

Economics—Statistical methods. | Industrial management—Statistical methods.

Classification: LCC HA29 .L75 2019 | DDC 519.5—dc23 LC record available at

https://lccn.loc.gov/2017034976

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a

website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill

Education does not guarantee the accuracy of the information presented at these sites.

mheducation.com/highered

D E D I CATI O N

To Jane, my wife and best friend, and our sons, their wives, and our

grandchildren: Mike and Sue (Steve and Courtney), Steve and Kathryn

(Kennedy, Jake, and Brady), and Mark and Sarah (Jared, Drew, and Nate).

Douglas A. Lind

To Oscar Sambath Marchal, Julian Irving Horowitz, Cecilia Marchal

Nicholson, and Andrea.

William G. Marchal

To my wonderful family: Barb, Hannah, and Isaac.

Samuel A. Wathen

A NOTE FROM THE AUTHORS

Over the years, we received many compliments on this text and understand that it’s a

favorite among students. We accept that as the highest compliment and continue to

work very hard to maintain that status.

The objective of Basic Statistics for Business and Economics is to provide students

majoring in management, marketing, finance, accounting, economics, and other fields of

business administration with an introductory survey of descriptive and inferential statistics. To illustrate the application of statistics, we use many examples and e

xercises that

focus on business applications, but also relate to the current world of the college student. A previous course in statistics is not necessary, and the mathematical requirement

is first-year algebra.

In this text, we show beginning students every step needed to be successful in

a basic statistics course. This step-by-step approach enhances performance, accelerates preparedness, and significantly improves motivation. Understanding the

concepts, seeing and doing plenty of examples and exercises, and comprehending

the application of statistical methods in business and economics are the focus of

this book.

The first edition of this text was published in 1967. At that time, locating relevant

business data was difficult. That has changed! Today, locating data is not a problem.

The number of items you purchase at the grocery store is automatically recorded at

the checkout counter. Phone companies track the time of our calls, the length of calls,

and the identity of the person called. Credit card companies maintain information on

the number, time and date, and amount of our purchases. Medical devices automatically monitor our heart rate, blood pressure, and temperature from remote locations.

A large amount of business information is recorded and reported almost instantly.

CNN, USA Today, and MSNBC, for example, all have websites that track stock prices

in real time.

Today, the practice of data analytics is widely applied to “big data.” The practice

of data analytics requires skills and knowledge in several areas. Computer skills are

needed to process large volumes of information. Analytical skills are needed to

evaluate, summarize, organize, and analyze the information. Critical thinking skills

are needed to interpret and communicate the results of processing the

information.

Our text supports the development of basic data analytical skills. In this edition,

we added a new section at the end of each chapter called Data Analytics. As you

work through the text, this section provides the instructor and student with opportunities to apply statistical knowledge and statistical software to explore several business environments. Interpretation of the analytical results is an integral part of these

exercises.

A variety of statistical software is available to complement our text. Microsoft Excel

includes an add-in with many statistical analyses. MegaStat is an add-in available for

Microsoft Excel. Minitab and JMP are stand-alone statistical software available to download for either PC or Mac computers. In our text, Microsoft Excel, Minitab, and MegaStat

are used to illustrate statistical software analyses. When a software application is presented, the software commands for the application are available in Appendix C. We use

screen captures within the chapters, so the student becomes familiar with the nature of

the software output.

Because of the availability of computers and software, it is no longer necessary to

dwell on calculations. We have replaced many of the calculation examples with interpretative ones, to assist the student in understanding and interpreting the statistical results.

In addition, we place more emphasis on the conceptual nature of the statistical topics.

While making these changes, we still continue to present, as best we can, the key concepts, along with supporting interesting and relevant examples.

vi

WHAT’S NEW IN THE NINTH EDITION?

We have made many changes to examples and exercises throughout the text. The section on “Enhancements” to our text details them. There are two major changes to the

text. First, the chapters have been reorganized so that each section corresponds to a

learning objective. The learning objectives have been revised.

The second major change responds to user interest in the area of data analytics.

Our approach is to provide instructors and students with the opportunity to combine

statistical knowledge, computer and statistical software skills, and interpretative and

critical thinking skills. A set of new and revised exercises is included at the end of each

chapter in a section titled “Data Analytics.”

In these sections, exercises refer to three data sets. The North Valley Real Estate

sales data set lists 105 homes currently on the market. The Lincolnville School District

bus data list information on 80 buses in the school district’s bus fleet. The authors designed these data so that students will be able to use statistical software to explore the

data and find realistic relationships in the variables. The Baseball Statistics for the 2016

season is updated from the previous edition.

The intent of the exercises is to provide the basis of a continuing case analysis. We

suggest that instructors select one of the data sets and assign the corresponding exercises as each chapter is completed. Instructor feedback regarding student performance

is important. Students should retain a copy of each chapter’s results and interpretations

to develop a portfolio of discoveries and findings. These will be helpful as students

progress through the course and use new statistical techniques to further explore the

data. The ideal ending for these continuing data analytics exercises is a comprehensive

report based on the analytical findings.

We know that working with a statistics class to develop a very basic competence in

data analytics is challenging. Instructors will be teaching statistics. In addition, instructors will be faced with choosing statistical software and supporting students in developing or enhancing their computer skills. Finally, instructors will need to assess student

performance based on assignments that include both statistical and written components. Using a mentoring approach may be helpful.

We hope that you and your students find this new feature interesting and engaging.

vii

H OW A R E C H A P TE RS O RGA N I Z E D TO E N GAG E

STU D E NTS A N D PRO M OTE LE A R N I N G?

Chapter Learning Objectives

©goodluz/Shutterstock

MERRILL LYNCH recently completed a study of online investment portfolios for a sample

Each chapter begins with a set of

learning objectives designed to provide focus for the chapter and motivate

student learning. These objectives, located in the margins next to the topic,

indicate what the student should be

able to do after completing each section in the chapter.

of clients. For the 70 participants in the study, organize these data into a frequency

distribution. (See Exercise 43 and LO2-3.)

LEARNING OBJECTIVES

When you have completed this chapter, you will be able to:

LO2-1 Summarize qualitative variables with frequency and relative frequency tables.

LO2-2 Display a frequency table using a bar or pie chart.

LO2-3 Summarize quantitative variables with frequency and relative frequency distributions.

LO2-4 Display a frequency distribution using a histogram or frequency polygon.

DESCRIBING DATA: FREQUENCY TABLES, FREQUENCY DISTRIBUTIONS, AND GRAPHIC PRESENTATION

Chapter Opening Exercise

A representative exercise opens

LO2-3 the chapter and shows how the chapter

CONSTRUCTING

FREQUENCY

20

CHAPTER 2

quantitative

content can be applied to aSummarize

real-world

situation.

variables with frequency

and relative frequency

distributions.

Introduction to the Topic

Each chapter starts with a review of

the important concepts of theLin87500_ch02_019-052.indd

previous chapter and provides a link to the

material in the current chapter. This

step-by-step approach increases comprehension by providing continuity

across the concepts.

Example/Solution

After important concepts are introduced,

a solved example is given. This example

provides a how-to illustration and shows

a relevant business application that

helps students answer the question,

“How can I apply this concept?”

27

DISTRIBUTIONS

In Chapter 1 and earlier in this chapter, we distinguished between qualitative and quantitative

data. In the previous section, using the Applewood Automotive Group data, we summarized

two qualitative variables:

the location of the sale and the type of vehicle sold. We created

INTRODUCTION

frequency and relative

frequency tables and depicted the results in bar and pie charts.

The United States automobile retailing industry is highly competitive. It is dominated by

The Applewood

Auto Groupthat

data

several

quantitative

variables:

megadealerships

ownalso

andinclude

operate 50

or more

franchises, employ

overthe

10,000

age of the buyer,people,

the profit

the sale

the vehicle,

number

of dealerships

previand earned

generateon

several

billionof

dollars

in annual and

sales.the

Many

of the top

are wants

publiclyto

owned,

with shares

on sales

the New

Stock

Exchange

ous purchases. Suppose Ms. Ball

summarize

last traded

month’s

byYork

profit

earned

or NASDAQ.

In 2017,

the largest megadealership

for each vehicle. We can describe

profit using

a frequency

distribution. was AutoNation (ticker

symbol AN), followed by Penske Auto Group (PAG), Group 1 Automotive,

7/28/17

Inc. (ticker symbol GPI), and the privately owned Van Tuyl Group.

These

large

corporations

use

statistics

and

analytics

to

summarize

FREQUENCY DISTRIBUTION A grouping of quantitative data into mutually exclusive

and analyze

datathe

andnumber

information

to support their

As an exand collectively exhaustive classes

showing

of observations

indecisions.

each class.

ample, we will look at the Applewood Auto Group. It owns four dealerships and sells a wide range of vehicles. These include the popular

Korean brands Kia and Hyundai, BMW and Volvo sedans and luxury

How do we develop a frequency

distribution?

The

following

example

shows

the steps to

SUVs,

and a full line

of Ford

and Chevrolet

cars

and trucks.

construct a frequency distribution.

is to

tables, charts,

Ms.Remember,

Kathryn Ball our

is a goal

member

of construct

the senior management

team at

and graphs that will quickly summarize

theGroup,

data which

by showing

the location,

extreme

Applewood Auto

has its corporate

offices adjacent

to Kane

©Darren Brode/Shutterstock

is responsible

for tracking and analyzing vehicle sales and the profitability

values, and shapeMotors.

of theShe

data’s

distribution.

of those vehicles. Kathryn would like to summarize the profit earned on the vehicles sold

using tables, charts, and graphs that she would review and present to the ownership

E X A M P L E group monthly. She wants to know the profit per vehicle sold, as well as the lowest and

highest amount of profit. She is also interested in describing the demographics of the buyMs. Kathryn Ballers.

of What

the Applewood

Auto

wants to

summarize

the quantitative

are their ages?

HowGroup

many vehicles

have

they previously

purchased from one

of theaApplewood

What

of vehicle

they purchase?

variable profit with

frequencydealerships?

distribution

andtype

display

the did

distribution

with charts

The Applewood

Auto

Group

four answer

dealerships:

and graphs. With this

information,

Ms.

Balloperates

can easily

the following ques19

7:44 AM

tions: What is the

profit

eachsells

sale?

What

is the largest

maximum profit

• typical

Tionesta

Fordon

Lincoln

Ford

and Lincoln

cars andor

trucks.

• is

Olean

Automotive

Inc. has theprofit

Nissan

asAround

well as the

General

on any sale? What

the smallest

or minimum

onfranchise

any sale?

what

value Motors

of Chevrolet, Cadillac, and GMC trucks.

do the profits tend brands

to cluster?

• Sheffield Motors Inc. sells Buick, GMC trucks, Hyundai, and Kia.

S O L U T I O N • Kane Motors offers the Chrysler, Dodge, and Jeep lines as well as BMW and Volvo.

Every month, Ms. Ball collects data from each of the four dealerships

To begin, we show the profits

each

of into

the an

180

vehicle

sales listed

in Table

and for

enters

them

Excel

spreadsheet.

Last month

the2–4.

Applewood

This information is calledAuto

rawGroup

or ungrouped

data because

it is simplyAacopy

listing

sold 180 vehicles

at the four dealerships.

of the first

few observations appears to the left. The variables collected include:

TABLE 2–4 Profit on Vehicles Sold

Last Month by the Applewood Auto Group

•

Age—the age of the buyer at the time of the purchase. Maximum

• Profit—the amount earned by the dealership on the sale of each

Self-Reviews

Self-Reviews are interspersed

throughout each chapter and

follow Example/Solution sections. They help students monitor their progress and provide

immediate reinforcement for

that particular technique. Answers are in Appendix E.

$1,387

$2,148

$2,201

$vehicle.

963

$ 820

$2,230

$3,043

$2,584

$2,370

1,754

2,207

996 • 1,298

1,266

2,341

1,059

2,666

2,637

Location—the

dealership

where the

vehicle was

purchased.

Vehicle type—SUV,

hybrid, or2,991

truck.

1,817

2,252

2,813 • 1,410

1,741 sedan,

3,292compact,

1,674

1,426

42

CHAPTER 2

•

Previous—the

number

of

vehicles

previously

purchased

at

any of the

1,040

1,428

323

1,553

1,772

1,108

1,807

934

2,944

four Applewood dealerships by the consumer.

1,273

1,889

352

1,648

1,932

1,295

2,056

2,063

2,147

entire data 2,350

set is available

in Connect

and in Appendix

A.41,973

at the end

482 The 2,071

1,344

2,236

2,083

S E L F - R E V I E W 1,529

2–5 1,166

text.

3,082

1,320

1,144 of the

2,116

2,422

1,906

2,928

2,856

2,502

Source: Microsoft Excel

The hourly wages of the 15 employees of Matt’s Tire and Auto Repair are organized into

1,951

2,265

1,500

2,446

1,952

1,269

2,989

783

the following

table. 1,485

LO2-1

2,692

1,323

1,509

1,549

369

2,070

1,717

910

1,538

Hourly

Wages

Number

of

Employees

Summarize1,206

qualitative 1,760

1,638

2,348

978

2,454

1,797

1,536

2,339

Recall from

1 that techniques

used to describe a set of data are called descripvariables with

frequency

$ 8 Chapter

up to $10

1,342

1,919

1,961

2,498

1,238 3

1,606

1,955

1,957

2,700

tive statistics.

Descriptive

statistics 7organize data to show the general pattern of the

and relative frequency

10 up to

12

443

2,357 data, to

2,127

294 values1,818

1,680

2,199to expose

2,240

identify

tend 4to concentrate,

and

extreme2,222

or unusual

tables.

12 up to where

14

754

2,866 data values.

2,430

1,115

1,824

1,827

2,482 table.2,695

2,597

The

first

technique

we discuss

is a frequency

14 up

to 16

1

1,621

732

1,704

1,124

1,907

1,915

2,701

1,325

2,742

(a) What1,464

is the table called?

870

1,876

1,532 A grouping

1,938 of qualitative

2,084 data

3,210

2,250

1,837

FREQUENCY

TABLE

into

(b) Develop a cumulative

frequency

distribution and portray

the distribution

in amutually

cumula- exclusive and

1,174 tive frequency

1,626 collectively

2,010 exhaustive

1,688 classes

1,940

2,279 in each

2,842

showing2,639

the number 377

of observations

class.

polygon.

(c) On the

basis of the

cumulative

frequency 2,197

polygon, how many

1,412

1,762

2,165

1,822

842 employees

1,220 earn less

2,626

2,434

than

$11

per

hour?

1,809

1,915

2,231

1,897

2,646

1,963

1,401

1,501

1,640

2,415

2,119

2,389

2,445

1,461

2,059

2,175

1,752

1,821

E X E R C I S E S 1,546

1,766

335

2,886

1,731

2,338

1,118

2,058

2,487

CONSTRUCTING FREQUENCY TABLES

19. The following cumulative frequency and the cumulative relative frequency polygon

Minimum

for the distribution of hourly wages of a sample

of certified welders in the Atlanta,

Georgia, area is shown in the graph.

viii

7/28/17 7:44 AM

40

100

30

75

ent

ency

Lin87500_ch02_019-052.indd 20

36

CHAPTER 2

Frequency Polygon

STATISTICS IN ACTION

Statistics in Action

A frequency polygon also shows the shape o

121

gram. It consists of line segments connecting

th

the class midpoints and the class frequencies. T

is illustrated in Chart 2–5. We use the profits fro

wood Auto Group. The midpoint of each class

CHAPTER

2

RedLine

Productions

recently

a new

video game.

playability

to be tested

frequencies

onItsthe

Y-axis.is Recall

that the class

cal analysis.

When developed

she

by 80 veteran game players.

class and represents the typical values in that c

encountered

an

unsanitary

(a) What is the experiment?

of observations in a particular class. The profit

or an

undersup(b) horizontal

What iscondition

oneaxis

possible

outcome?

and

the

class frequencies on the vertical axis. The class frequencies

the

Applewood

Auto

Group

is repeated

belo

(c) are

Suppose

65

of

the

80

players

testing

the

new

game

said they

liked

Is 65

a probability?

plied

hospital,

she

improved

represented by the heights of theby

bars.

However,

there

isit.one

important

differFlorence Nightingale is

A SURVEY OF PROBABILITY CONCEPTS

Statistics in Action articles are scattered throughknown as the founder of

out the text, usually about two per chapter. They

the nursing profession.

provide unique, interesting applications and hisHowever, she also saved

S E L F - R E V I E W 5–1

many lives by using statistitorical insights in the field of statistics.

34

(d)

(e)

The probability

new of

game

beQuantitative

a success is computed

to be −1.0.

Comment.

ence

based

onthat

thethe

nature

the will

data.

data are usually

measured

using

the conditions

and

then

Specifythat

one possible

event. not discrete. Therefore, the horizontal axis represents all

scales

continuous,

Profit

usedare

statistical

data to

possible values, and the bars are drawn adjacent to each other to show the continudocument the improve$ 200 up to $ 600

ous nature of the data.

Midpo

APPROACHES TO ASSIGNING PROBABILITIES

Definitions

LO5-2

ment. Thus, she was able

Assign probabilities using

600 up to 1,000

to convince

others

There are three

ways to

assign

probability to an event: classical,

empirical,

a classical, empirical,66

or

CHAPTER

3 of athe

1,000

up to and

1,400subjecDefinitions of new terms

or terms

unique to tive. The

HISTOGRAM

A graph

in which

the classes

are marked

onare

thebased

horizontal

axis and

classical

empirical

methods

are objective

and

on 1,800

information

subjective

approach.

need forand

medical

reform,

1,400 up to

the class

frequencies

on

theof

vertical

class frequencies

are represented

by

The

subjective

method

is

basedaxis.

on aThe

person’s

belief or estimate

of an event’s

the study of statistics are set apart from the and data.

particularly

in the

area

1,800other.

up to 2,200

the heights of the bars, and the bars are drawn adjacent to each

likelihood.

text and highlighted for easy reference and

sanitation. a.

SheWhat

developed

is the arithmetic mean of the Alaska unemployment

2,200 uprates?

to 2,600

b. Find

median and the mode for the unemployment rates.

review. They also appear in the Glossary at

original graphs

to the

demon2,600

up

to(Dec–Mar)

3,000 months.

c.

Compute

the

arithmetic

mean

and

median

for

just

the

winter

Classical

Probability

strate

that, during

the different?

the end of the book.

Is it much

3,000 up to 3,400

Big Orange

is designing

anoutcomes

information of

system

for use in “in-cab”

more

soldiers

Classical

is based

on the Trucking

assumption

that the

an experiment

are

E Xprobability

ACrimean

M P L22.

EWar,

Total

communications.

It must summarize

data from

eight

siteshappening

throughout aisregion

equally likely.

Using

the

classicalcondiviewpoint,

the probability

of an

event

com-to

died

from

unsanitary

describe typical

conditions.

Compute

appropriate

measure

of month

central location

Below

is the

frequency

distribution

of the

profitsanon

vehicle sales

last

at the for

puted by dividing

the number

of favorable

outcomes

by the

number

of possible outcomes:

theGroup.

variables

wind direction,

temperature,

and

pavement.

tions than

were

killed

in

Applewood

Auto

Formulas

combat.

EXERCIS

Exercises are included after sections within the chapter and at

the end of the chapter. Section

exercises cover the material studied in the section. Many exercises

have data files available to import

into statistical software. They are

indicated with the FILE icon.

Answers to the odd-numbered

exercises are in Appendix D.

City

Wind Direction

40

Birmingham, AL600 up to 1,000

South

Jackson, MS 1,000 up to 1,400

Southwest

32

E X A MCHAPTER

PLE 2

1,400

up

to

1,800

Meridian, MS

South

Monroe, LA 1,800 up to 2,200

Southwest

24

Consider an experiment

of rolling

a six-sided

die.

Tuscaloosa,

AL

Southwest

2,200 up to 2,600

Pavement

Dry

(5–1)

Wet

Wet

Dry

Dry

Trace

Wet

of

Tracethe

11

91

23

92

38

92

93

45

What

is the

93 probability

32

appear

up toface

3,000up”?

19

Eevent

S “an even number of spots2,600

16

up to 3,400

15. Molly’s Candle Shop 3,000

has several

retail stores 4in the coastal areas of North and

8 ask180

South

Carolina.Solution

Many of

Molly’s customers

her to ship their purchases. The folTotal

S O L U T I O Software

N

lowing chart shows the number of packages shipped per day for the last 100 days.

We can use a statistical software package to find many measures of location.

example,are:

the first class shows that there were 5 days when the number of packThe possible For

outcomes

0

400

800

1,200

shipped was

0 up

to 5.

Construct ages

a histogram.

What

observations

can you reach based on the information

1,600

2

X A histogram?

MPLE

presented inE the

Profi

a one-spot

four-spot

Table 2–4

thea profit

on the sales of 180 vehicles at Applewood

30on page 27 shows 28

Auto Group. Determine the mean and23the median selling price.

18

a

two-spot

20

a

five-spot

SOLUTION

13

CHART 2–5 Frequency

Polygon of Profit on 180 Vehicl

10

10

S O LaUthree-spot

TIO

N scaled

5

a six-spot

The class frequencies

are

along the

vertical axis (Y-axis) and

3 either the class

As noted

previously,

$200

up to $600

limits or theThe

class

midpoints

along

horizontal

axis.

To

illustrate

thethe

construction

0 median,

mean,

and the

modal

amounts

of profit

are reported

in the

following

5

10

25

30

35

$400.

To20

construct

ainstructions

frequency

polygon,

mov

of the histogram,

first three

are15shot).

shown

in Chart

2–3.

outputthe

(highlighted

inclasses

the screen

(Reminder:

The

to create

the

Number of Packages

appear in

the Software

Commands

Appendix

C.)

are 180to

vehicles

There are threeoutput

“favorable”

outcomes

(apoint,

two,

a$400,

four,inand

a six)

in There

the

collection

of8, the class

and

then

vertically

in the study, so using a calculator would be tedious and prone to error.

six equally likely possible outcomes. Therefore:

the y values of this point are called the coordin

a. What is this chart called?

are x =Number

800 and

y = 11. outcomes

The process is contin

3 of ←

of favorable

b. What

is the total number

packages

shipped?

32even

ofc.anWhat

number

=

is the

class interval?

connected

in order.

That is,

the point represe

6 ←

Total number

of possible

outcomes

23up to 15 class?

d. What

shipped in the 10

24 is the number=of.5packages

one

representing

the

second

class and so on

e. What is the relative frequency of packages shipped in the 10 up to 15 class?

the

f. What

upfrequency

to 15 class? polygon, midpoints of $0 and $3,

16 is the midpoint of the 10

g. On how many days were there

or 11more packages

shipped?

the25polygon

at zero

frequencies. These two va

Number of Vehicles

(class frequency)

Probability

Computer Output

Temperature

Number of favorable outcomes

Probability

Anniston, AL

89

= Profit West 48 Frequency

ofAtlanta,

an event

GA

Northwest of possible outcomes

86

Total number

$ 200 up to $ 600

8

Augusta, GA

Southwest

92

Frequency

Exercises

CLASSICAL

PROBABILITY

Frequency

Formulas that are used for the first time

are boxed and numbered for reference. In

addition, key formulas are listed in the

back of the text as a reference. 38

$ 40

80

1,20

1,60

2,00

2,40

2,80

3,20

8

Frequency

mutually exclusive

concept appeared earlier in our study of frequency distri8

The text includes many software examples, The

using

16. The following

chart shows the number

of patientsthe

admitted

dailyinterval

to Memorial

subtracting

class

ofHospital

$400 from the

butions in Chapter

2. Recall

that we create

classes so that a particular value is included

through

the

emergency

room. $400

Excel, MegaStat , and Minitab. The software results

are

to

the

highest

midpoint

($3,200)

in only one of the classes and there is no overlap between classes. Thus, only one of in the fre

200

600 Both 1,000

1,400 and the frequency pol

the histogram

illustrated in the chapters. Instructions for a particular

several events can occur at a particular

time.

Profit $characteristics of the data (highs, lows

30

the main

software example are in Appendix C.

the two representations are similar in purpose

each class as a rectangle, with the he

20

depicting

CHART 2–3 Construction

of a Histogram

10

0

Source: Microsoft Excel

Lin87500_ch05_117-154.indd 121

Lin87500_ch02_019-052.indd 34

a.

b.

c.

d.

2

4

6

8

Number of Patients

10

What is the midpoint of the 2 up to 4 class?

On how many days were 2 up to 4 patients admitted?

What is the class interval?

What is this chart called?

12

ix

8/16/17 1:01 PM

17. The following frequency distribution reports the number of frequent flier miles,

reported in thousands, for employees of Brumley Statistical Consulting Inc. during

7/28/17

median sales

price

is, values

and the

median

$60,000.

Why was the developer only reporting

a. Only

two

are

used inisits

calculation.

It is influenced

by extreme

values. important to a person’s decision making

the meanb.price?

This information

is extremely

c. Itaishome.

easy to

computethe

and

to understand.

when buying

Knowing

advantages

and disadvantages of the mean, median,

The variance

is theas

mean

of the squared

from

thestatistical

arithmeticinformation

mean.

andB.mode

is important

we report

statisticsdeviations

and as we

use

to

1. The formula for the population variance is

make decisions.

We also learned how to compute2 measures

Σ(x − μ) 2 of dispersion: range, variance, and

σ =

(3–5)

standard deviation. Each of these statistics

also

N has advantages and disadvantages.

Remember

that

the range

information

2. The

formula

for theprovides

sample variance

is about the overall spread of a distribution. However, it does not provide any information2 about how the data are clustered or

Σ(x − x )

concentrated around the center of the

distribution. As we learn more about statistics,

s2 =

(3–7)

n−1

we need to remember that when we use statistics

we must maintain an independent

3. The major

the variance

are:

and principled

pointcharacteristics

of view. Any of

statistical

report

requires objective and honest coma. of

Allthe

observations

munication

results. are used in the calculation.

H OW DO E S TH I S TE X T R E I N FO RC E

STU D E NT LE A R N I N G?

BY C H A P TE R

CHAPTER

Chapter Summary

Each chapter contains a brief summary

of the chapter material, including vocabulary, definitions, and critical formulas.

44

Pronunciation Key

PRONUNC

This section lists the mathematical symbol,

its meaning, and how to pronounce it. We

believe this will help the student retain the

meaning of the symbol and generally enhance course communications.

Chapter Exercises

b. The units are somewhat difficult to work with; they are the original units squared.

C. The standard deviation is the square root of the variance.

1. The major characteristics of the standard deviation are:

a. It is in the same units as the original data.

S U M M A R b.

Y It is the square root of the average squared distance from the mean.

c. It cannot be negative.

I. A measure

ofthe

location

a value

used tomeasure

describeofthe

central tendency of a set of data.

d. It is

most is

widely

reported

dispersion.

A. The

arithmetic

is sample

the most

widely reported

of location.

2. The

formulamean

for the

standard

deviationmeasure

is

1. It is calculated by adding the values of the observations

and dividing by the total

2

)

Σ(x

−

x

number of observations.

s=

(3–8)

n −of1 ungrouped or raw data is

a. The formula for the population√mean

III. We use the standard deviation to describe

Σx a frequency distribution by applying

(3–1)

=

Chebyshev’s theorem or the EmpiricalμRule.

N

A. Chebyshev’s

theorem

states

that mean

regardless

of the shape of the distribution, at least

b. The

formula

for the

sample

is

2

1 − 1/k of the observations will be within k standard deviations of the mean, where k

Σx

is greater than 1.

x=

(3–2)

n

B. The Empirical Rule states that for a bell-shaped

distribution about 68% of the values

2.

the arithmetic

willThe

be major

within characteristics

one standard of

deviation

of the mean

mean,are:

95% within two, and virtually all

a. At

least the interval scale of measurement is required.

within

three.

b. All the data values are used in the calculation.

c. A set of data has only one mean. That is, it is unique.

d. The sum of the deviations from the mean equals 0.

CHAPTER 2

B. The median is the value in the middle of a set of ordered data.

1.

To

I A T I O N K E find

Y the median, sort the observations from minimum to maximum and identify

the middle value.

B. The

class

frequency

is the number

observations

in each class.

2. The

major

characteristics

of the of

median

are:

SYMBOL

MEANING

PRONUNCIATION

C. The class

interval

is

the difference

between the limits

of two consecutive classes.

At least

the

ordinal

scale

of measurement

is required.

μ D. Thea.class

Population

mean

mu

midpoint

is

halfway

between

the

limits

of

consecutive

classes.

b. It is not influenced by extreme values.

Σ A relative

Operation

of shows

addingtheare

sigma

VI.

frequency

distribution

percent

observations

in each

class.

c. Fifty

percent

of the observations

largerofthan

the median.

VII.

There

are

several

methods

for

graphically

portraying

a

frequency

distribution.

Σx

a of

group

sigma x

d. It is uniqueAdding

to a set

data.of values

A.

A

histogram

portrays

the

frequencies

in often

the form

of

a of

rectangle

or bar for each class.

C.

The

mode

is

the

value

that

occurs

most

in

a

set

data.

x

Sample mean

x bar

The

height

of the

is proportional

the class frequencies.

1. The

mode

canrectangles

be found for

nominal-leveltodata.

x w B. A frequency polygon

Weighted

mean line segments connecting the points

x bar

sub by

w the

consists

formed

2. A set of data can have

moreofthan

one mode.

2

intersection of the

class midpoint

and the class frequency.

Population

variance

sigma squared

σ

C.

A

graph

of

a

cumulative

frequency

distribution

shows

the

number

of

observations

less

σ

Population standard deviation

sigma

than a given value.

D. A graph of a cumulative relative frequency distribution shows the percent of observations less than a given value.

CHAPTER EXERCISES

Lin87500_ch03_053-087.indd 81

Generally, the end-of-chapter exercises

are the most challenging and integrate

the chapter concepts. The answers and

worked-out solutions for all oddnumbered exercises are in Appendix D

at the end of the text. Many exercises

are noted with a data file icon in the margin. For these exercises, there are data

files in Excel format located in C

onnect.

These files help students use statistical

software to solve the exercises.

Data Analytics

The goal of the Data Analytics sections is to develop analytical skills.

The exercises present a real-world

context with supporting data. The data

sets are printed in Appendix A and

available to download from Connect.

Statistical software is required to analyze

the data and respond to the exercises.

Each data set is used to explore questions and discover findings that relate to

a real-world context. For each business

context, a story is uncovered as students

progress from chapter 1 to 15.

x

Lin87500_ch03_053-087.indd 82

23. Describe the similarities and differences of qualitative and quantitative variables.

Be 10:42 AM

9/20/17

sure to include the following:

a. What level of measurement is required for each variable type?

9/20/17

b. Can both types be used to describe both samples and populations?

24. Describe the similarities and differences between a frequency table and a frequency

distribution. Be sure to include which requires qualitative data and which requires quantitative data.

25. Alexandra Damonte will be building a new resort in Myrtle Beach, South Carolina. She

must decide how to design the resort based on the type of activities that the resort will

offer to its customers. A recent poll of 300 potential customers showed the following

results about customers’ preferences for planned resort activities:

Like planned activities

Do not like planned activities

Not sure

No answer

10:42 AM

63

135

78

24

a.

b.

c.

d.

What is the table called?

Draw a bar chart to portray the survey results.

Draw a pie chart for the survey results.

If you are preparing to present the results to Ms. Damonte as part of a report, which

graph would you prefer to show? Why?

Speedy Swift is a package delivery service that serves the greater Atlanta, Georgia,

26.

metropolitan area. To maintain customer loyalty, one of Speedy Swift’s performance

DESCRIBING DATA: FREQUENCYobjectives

TABLES, FREQUENCY

DISTRIBUTIONS,

AND GRAPHIC

PRESENTATION

is on-time delivery.

To monitor its performance,

each

delivery is measured 51

on

the following scale: early (package delivered before the promised time), on-time (package delivered within 15 minutes of the promised time), late (package delivered more

than 15 minutes past the promised time), or lost (package never delivered). Speedy

D A T A A N A L Y T I C S Swift’s objective is to deliver 99% of all packages either early or on-time. Speedy collected the following data for last month’s performance:

(The data for these exercises are available in Connect.)

On-time

Early

Early

Early

On-time

On-time

Early

On-time

On-time

On-time

Lin87500_ch02_019-052.indd 44

On-time

On-time

On-time

On-time

Late

Late

Early

On-time

Early

On-time

Late

On-time

On-time

On-time

On-time

Late on homes

On-time

51.Early

Refer

to the North

Valley Real

Estate data,

which report

information

sold

On-time

On-time

On-time

On-time

On-time class

On-time

On-time

during theEarly

last year. For

the variable

price, select

an appropriate

interval and

orgaEarly

On-time prices

On-time

On-time distribution.

Early

On-time

On-time summarizing

On-time

nize the selling

into a frequency

Write

a brief report

On-time

Late Be sureEarly

On-time

On-time

Early

your findings.

to answer Early

the following

questionsOn-time

in your report.

Late

On-time

On-time

On-time

On-time

On-time

On-time

a. AroundOn-time

what values

of price do

the data tend

to cluster?

Early

Early distribution,

On-time whatLost

On-time

On-time

On-time

b. BasedOn-time

on the frequency

is the typical

selling price

in the first

class?

On-timeWhat isOn-time

Early

On-time

On-time

On-time

the typicalLate

selling price

in the lastLost

class?

Early

On-time

Early

On-time

Early

On-time

Late

On-time

c. Draw a cumulative relative frequency distribution. Using this distribution, fifty

On-timepercent

On-time

On-time

Late

On-time

Early

of the homes

sold for

what price

or less? Estimate

theOn-time

lower priceOn-time

of the

On-timetop tenOn-time

Early

Earlypercent of

On-time

On-time

On-time

percent ofOn-time

homes sold.

About what

the homes

sold for less

than

$300,000?

d. Refer to the variable bedrooms. Draw a bar chart showing the number of homes sold

with 2, 3, or 4 or more bedrooms. Write a description of the distribution.

Refer to the Baseball 2016 data that report information on the 30 Major League

52.

Baseball teams for the 2016 season. Create a frequency distribution for the Team Salary

variable and answer the following questions.

a. What is the typical salary for a team? What is the range of the salaries?

b. Comment on the shape of the distribution. Does it appear that any of the teams have

a salary that is out of line with the others?

c. Draw a cumulative relative frequency distribution of team salary. Using this distribution, forty percent of the teams have a salary of less than what amount? About how

many teams have a total salary of more than $220 million?

Refer to the Lincolnville School District bus data. Select the variable referring to

53.

the number of miles traveled since the last maintenance, and then organize these data

into a frequency distribution.

a. What is a typical amount of miles traveled? What is the range?

b. Comment on the shape of the distribution. Are there any outliers in terms of miles

driven?

c. Draw a cumulative relative frequency distribution. Forty percent of the buses

were driven fewer than how many miles? How many buses were driven less than

10,500 miles?

d. Refer to the variables regarding the bus manufacturer and the bus capacity. Draw a

9/20/17 9:26 AM

53.

Practice Test

many teams have a total salary of more than $220 million?

Refer to the Lincolnville School District bus data. Select the variable referring to

the number of miles traveled since the last maintenance, and then organize these data

into a frequency distribution.

a. What is a typical amount of miles traveled? What is the range?

b. Comment on the shape of the distribution. Are there any outliers in terms of miles

driven?

c. Draw a cumulative relative frequency distribution. Forty percent of the buses

were driven fewer than how many miles? How many buses were driven less than

10,500 miles?

d. Refer to the variables regarding the bus manufacturer and the bus capacity. Draw a

pie chart of each variable and write a description of your results.

PRACTICE TEST

The Practice Test is intended to

give students an idea of content

that might appear on a test and

how the test might be structured.

The Practice Test includes both

objective questions and problems

covering the material studied in

the section.

Part 1—Objective

1. A grouping of qualitative data into mutually exclusive classes showing the number of observations in each class is

15–2. The MegaStat commands to cre

.

known as a

of-fitin

test

on class

pageis483 are:

2. A grouping of quantitative data into mutually exclusive classes showing the number of observations

each

a. Enter the information from T

.

known as a

shown. (propor3. A graph in which the classes for qualitative data are reported on the horizontal axis and the class frequencies

.

tional to the heights of the bars) on the vertical axis is called a

b. Select MegaStat, Chi-Squar

4. A circular chart that shows the proportion or percentage that each class represents of the total is calledFit

a Test, and. hit Enter.

5. A graph in which the classes of a quantitative variable are marked on the horizontal axis and the class

c. Infrequencies

the dialogon

box, select B2

the vertical axis is called a

.

C2:C5 as the Expected valu

6. A set of data included 70 observations. How many classes would you suggest to construct a frequency

distribution?estimated fro

of parameters

7.

8.

9.

10.

The distance between successive lower class limits is called the

.

The average of the respective class limits of two consecutive classes is the class

In a relative frequency distribution, the class frequencies are divided by the

A cumulative frequency polygon is created by line segments connecting the class

sponding cumulative frequencies.

.

.

and the corre-

CHAPTER 14

A PPE N D IX M ATE R IA L

Software Commands

Lin87500_ch02_019-052.indd 51

Software examples using Excel, MegaStat,

and Minitab are included throughout the

text. The explanations of the computer

input commands are placed at the end of

the text in Appendix C.

Note: We do not show steps for all the statistical software in Chapter 14.

The following shows the basic steps.

14–1. The Excel commands to produce the multiple regression output on page 422 are:

a. Import the data from Connect. The file name is Tbl14.

b. Select the Data tab on the top menu. Then on the far right,

select Data Analysis. Select Regression and click OK.

c. Make the Input Y Range A1:A21, the Input X Range

B1:D21, check the Labels box, the Output Range is F1,

then click OK.

15–3. The MegaStat commands to cre

7/28/17 7:44 AM

of-fit tests on pages 488 and 48

number of items in the observe

umns. Only one dialog box is sh

a. Enter the Levels of Manag

page 488.

b. Select MegaStat, Chi-Squar

Fit Test, and hit Enter.

c. In the dialog box, select B1

C1:C7 as the Expected valu

of parameters estimated fro

A PPE N D IX E : A N SWE RS TO S E LF - RE V I E W

CHAPTER 1

c. Class frequencies.

15–4. The MegaStat commands for the

d. The largest concentration of commissions is $1,500

1–1 a. Inferential statistics, because a sample was used to draw a

page up

493toare:

CHAPTER

15

$1,600.

The

smallest

commission

is

about

$1,400

the

conclusion about how all consumers in the population

a. and

Enter

Table 15–5 on page

15–1. The MegaStat commands

two-sample

testThe

of proporlargestforisthe

about

$1,800.

typical amount earned

is the row and colum

Include

would react if the chicken dinner were marketed.

tions on page 477 are:

Total

column

or row.

$1,550.

b. On the basis of the sample of 1,960 consumers, we estia. Select MegaStat from

the Add-Ins tab. From the menu,

se6

b. Select

2–3 a. 2Tests,

= and

64 then

< 73

< 128 = 2 7 , so seven classes

areMegaStat from the

mate that, if it is marketed, 60% of all consumers will pur- lect Hypothesis

Compare Two Indepenselect Chi-square/Crossta

recommended.

chase the chicken dinner: (1,176/1,960) × 100 = 60%.

dent Proportions.

Table.

b. For

TheGroup

interval

width

should

benat

= 24.

1–2 a. Age is a ratio-scale variable. A 40-year-old is twice as old

b. Enter the data.

1, enter

x as

19 and

asleast

100. (488 − 320)/7

c. For the Input range, select c

The worked-out

solutions to the Self-Reviews are For Group 2, enter

Class

25 orOK.

30 are reasonable.

x asintervals

62 and n of

as either

200. Select

as someone 20 years old.

chi-square and Expected va

provided

at the

of the

text

in Appendix

E. car, and

c. Assuming a class interval of 25 and beginning with a lower

b. The

two end

variables

are: 1)

if a person

owns a luxury

limit of 300, eight classes are required. If we use an interval

2) the state of residence. Both are measured on a nominal scale.

of 30 and begin with a lower limit of 300, only seven classes

CHAPTER 2

are required. Seven classes is the better alternative.

2–1 a. Qualitative data, because the customers’ response to the

taste test is the name of a beverage.

Distance Classes

Frequency

Percent

b. Frequency table. It shows the number of people who prefer

300 up to 330

2

2.7%

each beverage.

c.

330 up to 360

2

2.7

360 up to 390

17

23.3

390 up to 420

27

37.0

40

420 up to 450

22

30.1

450 up to 480

1

1.4

30

480 up to 510

2

2.7

Grand Total

20

10

0

Cola-Plus Coca-Cola

73

100.00

d. 17

e. 23.3%, found by 17/73

f. 71.2%, found by (27 + 22 + 1 + 2)/73

2–4 a.

Lin87500_appc_526-533.indd 533

Pepsi

Beverage

20

Lemon-Lime

f

Frequency

Answers to Self-Review

20

xi

McGraw-Hill Connect® is a highly reliable, easy-touse homework and learning management solution

that utilizes learning science and award-winning

adaptive tools to improve student results.

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A D D ITI O N A L R E SOU RC E S

INSTRUCTOR LIBRARY

The McGraw-Hill Education Connect Business Statistics Instructor Library is your repository for additional resources

to improve student engagement in and out of class. You can select and use any asset that enhances your lecture,

including:

• Solutions Manual The Solutions Manual, carefully revised by the authors, contains solutions to all basic, intermediate, and challenge problems found at the end of each chapter.

• Test Bank The Test Bank, revised by Wendy Bailey of Troy University, contains hundreds of true/false, multiple

choice, and short-answer/discussions, updated based on the revisions of the authors. The level of difficulty

varies, as indicated by the easy, medium, and difficult labels.

• PowerPoint Presentations Prepared by Stephanie Campbell of Mineral Area College, the presentations contain exhibits, tables, key points, and summaries in a visually stimulating collection of slides.

• Excel Templates There are templates for various end-of-chapter problems that have been set as Excel

spreadsheets—all denoted by an icon. Students can easily download and save the files and use the data to

solve end-of-chapter problems.

MEGASTAT® FOR MICROSOFT EXCEL®

MegaStat by J. B. Orris of Butler University is a full-featured Excel statistical analysis add-in that is available on the

MegaStat website at www.mhhe.com/megastat (for purchase). MegaStat works with recent versions of Microsoft Excel

(Windows and Mac OS X). See the website for details on supported versions.

Once installed, MegaStat will always be available on the Excel add-ins ribbon with no expiration date or data limitations. MegaStat performs statistical analyses within an Excel workbook. When a MegaStat menu item is selected, a

dialog box pops up for data selection and options. Since MegaStat is an easy-to-use extension of Excel, students

can focus on learning statistics without being distracted by the software. Ease-of-use features include Auto Expand

for quick data selection and Auto Label detect.

MegaStat does most calculations found in introductory statistics textbooks, such as computing descriptive statistics,

creating frequency distributions, and computing probabilities, as well as hypothesis testing, ANOVA, chi-square

analysis, and regression analysis (simple and multiple). MegaStat output is carefully formatted and appended to an

output worksheet.

Video tutorials are included that provide a walk-through using MegaStat for typical business statistics topics. A context-sensitive help system is built into MegaStat, and a User’s Guide is included in PDF format.

MINITAB®/SPSS®/JMP®

Minitab Version 17, SPSS Student Version 18.0, and

JMP Student Edition Version 8 are software products

that are available to help students solve the exercises

with data files. Each software product can be packaged

with any McGraw-Hill business statistics text.

xiv

AC KN OWLE DG M E NTS

This edition of Basic Statistics for Business and Economics is the product of many people: students, colleagues, reviewers, and the

staff at McGraw-Hill Education. We thank them all. We wish to express our sincere gratitude to the reviewers:

Stefan Ruediger

Arizona State University

Golnaz Taghvatalab

Central Michigan University

Anthony Clark

St. Louis Community College

John Yarber

Northeast Mississippi Community

College

Umair Khalil

West Virginia University

John Beyers

University of Maryland

Leonie Stone

SUNY Geneseo

Mohammad Kazemi

University of North Carolina

Charlotte

Anna Terzyan

Loyola Marymount University

Lee O. Cannell

El Paso Community College

Their suggestions and thorough reviews of the previous edition and the manuscript of this edition make this a better text.

Special thanks go to a number of people. Shelly Moore, College of Western Idaho, and John

Arcaro, Lakeland Community College, accuracy checked the Connect exercises. Ed Pappanastos, Troy

University, built new data sets and revised SmartBook. Rene Ordonez, Southern Oregon University,

built the Connect guided examples. Wendy Bailey, Tory University, prepared the test bank. Stephanie

Campbell, Mineral Area College, prepared the PowerPoint decks. Vickie Fry, Westmoreland County

Community College, provided countless hours of digital accuracy checking and support.

We also wish to thank the staff at McGraw-Hill Education. This includes Noelle Bathurst, Portfolio

Manager; Michele Janicek, Lead Product Developer; Ryan McAndrews, Product Developer; Lori Koetters,

Content Project Manager; Daryl Horrocks, Program Manager; and others we do not know personally, but

who have made valuable contributions.

xv

xvi

CONTENTS

EN

H A N C E M E NTS TO

BA S I C STATI STI C S

FO R BUS I N E S S & E CO N O M I C S , 9 E

CHANGES MADE TO INDIVIDUAL CHAPTERS

• New contingency table in Exercise 31.

CHAPTER 1 What Is Statistics?

• Revised Example/Solution demonstrating the combination

formula.

• Revised Self-Review 1–2.

• New Data Analytics section with new data and questions.

• New section describing business analytics and its integration

with the text.

CHAPTER 6 Discrete Probability Distributions

• Updated Exercises 2, 3, 17, and 19.

• Expanded discussion of random variables.

• New photo and chapter opening exercise.

• Revised the Example/Solution in the section on Poisson

distribution.

• New introduction with new graphic showing the increasing

amount of information collected and processed with new

technologies.

• Updated Exercise 18 and added new Exercises 54, 55, and 56.

• Revised the section on the binomial distribution.

• New ordinal scale example based on rankings of states by

business climate.

• Revised Example/Solution demonstrating the binomial

distribution.

• The chapter includes several new examples.

• New exercise using a raffle at a local golf club to demonstrate

probability and expected returns.

• Chapter is more focused on the revised learning objectives,

improving the chapter’s flow.

• Revised Exercise 17 is based on economic data.

• New Data Analytics section with new data and questions.

• New Data Analytics section with new data and questions.

CHAPTER 7 Continuous Probability Distributions

• Revised Self-Review 7–1.

CHAPTER 2 Describing Data: Frequency Tables,

Frequency Distributions, and Graphic Presentation

• Revised the Example/Solutions using Uber as the context.

• Revised chapter introduction.

• Updated Statistics in Action.

• Added more explanation about cumulative relative frequency

distributions.

• Revised Self-Review 7–2 based on daily personal water

consumption.

• Updated Exercises 38, 45, 47, and 48 using real data.

• Revised Self-Review 2–3 to include data.

• Revised explanation of the Empirical Rule as it relates to the

normal distribution.

• New Data Analytics section with new data and questions.

• New Data Analytics section with new data and questions.

CHAPTER 3 Describing Data: Numerical Measures

CHAPTER 8 Sampling Methods and the Central

Limit Theorem

• Updated Self-Review 3–2.

• Reorganized chapter based on revised learning objectives.

• Replaced the mean deviation with more emphasis on the

variance and standard deviation.

• Updated Statistics in Action.

• New Data Analytics section with new data and questions.

• Updated Exercises 19, 22, 28, 37, and 48.

• New example of simple random sampling and the application

of the table of random numbers.

• The discussions of systematic random, stratified random, and

cluster sampling have been revised.

• Revised Exercise 44 based on the price of a gallon of milk.

• New Data Analytics section with new data and questions.

CHAPTER 4 Describing Data: Displaying and

Exploring Data

CHAPTER 9 Estimation and Confidence Intervals

• Updated Exercise 22 with 2016 New York Yankee player

salaries.

• Updated Exercises 5, 6, 12, 14, 24, 37, 39, and 55.

• New Data Analytics section with new data and questions.

CHAPTER 5 A Survey of Probability Concepts

• Updated Exercises 39 and 52 using real data.

• New Self-Review 9–3 problem description.

• New Statistics in Action describing EPA fuel economy.

• New separate section on point estimates.

• Integration and application of the central limit theorem.

• New explanation of odds compared to probabilities.

• A revised simulation demonstrating the interpretation of confidence level.

• New Exercise 21.

• New presentation on using the t table to find z values.

• New Example/Solution for demonstrating contingency tables

and tree diagrams.

• A revised discussion of determining the confidence interval

for the population mean.

xvi

• Expanded section on calculating sample size.

CHAPTER 13 Correlation and Linear Regression

• New Data Analytics section with new data and questions.

• Added new conceptual formula to relate the standard error to

the regression ANOVA table.

CHAPTER 10 One-Sample Tests of Hypothesis

• Revised the Example/Solutions using an airport cell phone

parking lot as the context.

• Revised software solution and explanation of p-values.

• Conducting a test of hypothesis about a population proportion is moved to Chapter 15.

• New example introducing the concept of hypothesis

testing.

• Sixth step added to the hypothesis testing procedure emphasizing the interpretation of the hypothesis test results.

• New Data Analytics section with new data and questions.

CHAPTER 11 Two-Sample Tests of Hypothesis

• Updated Exercises 41 and 57.

• Rewrote the introduction section to the chapter.

• The data used as the basis for the North American Copier

Sales Example/Solution used throughout the chapter have

been changed and expanded to 15 observations to more

clearly demonstrate the chapter’s learning objectives.

• Revised section on transforming data using the economic

relationship between price and sales.

• New Exercises 35 (transforming data), 36 (Masters prizes and

scores), 43 (2012 NFL points scored versus points allowed),

44 (store size and sales), and 61 (airline distance and fare).

• New Data Analytics section with new data and questions.

• Updated Exercises 5, 9, 30, and 44.

CHAPTER 14 Multiple Regression Analysis

• New introduction to the chapter.

• Updated Exercises 19, 22, and 25.

• Section of two-sample tests about proportions moved to

Chapter 15.

• Rewrote the section on evaluating the multiple regression

equation.

• Changed subscripts in Example/Solution for easier

understanding.

• More emphasis on the regression ANOVA table.

• New Data Analytics section with new data and questions.

• More emphasis on calculating the variance inflation factor to

evaluate multicollinearity.

CHAPTER 12 Analysis of Variance

• Revised Self-Reviews 12–1 and 12–3.

• Enhanced the discussion of the p-value in decision making.

• New Data Analytics section with new data and questions.

• New introduction to the chapter.

CHAPTER 15 Nonparametric Methods: NominalLevel Hypothesis Tests

• New Exercise 16 using the speed of browsers to search the

Internet.

• Updated the context of Manelli Perfume Company Example/

Solution.

• Revised Exercise 25 comparing learning in traditional versus

online courses.

• Revised the “Hypothesis Test of Unequal Expected Frequencies” Example/Solution.

• New section on comparing two population variances.

• Moved one-sample and two-sample tests of proportions from

Chapters 10 and 11 to Chapter 15.

• Updated Exercises 10, 16, 25, and 30.

• New example illustrating the comparison of variances.

• Revised the names of the airlines in the one-way ANOVA

example.

• New example introducing goodness-of-fit tests.

• Changed the subscripts in Example/Solution for easier

understanding.

• Revised section on contingency table analysis with a new

Example/Solution.

• New Data Analytics section with new data and questions.

• New Data Analytics section with new data and questions.

• Removed the graphical methods to evaluate normality.

xvii

BRIEF CONTENTS

1 What is Statistics? 1

2 Describing Data: Frequency Tables, Frequency Distributions,

and Graphic Presentation

19

3 Describing Data: Numerical Measures 53

4 Describing Data: Displaying and Exploring Data 88

5 A Survey of Probability Concepts 117

6 Discrete Probability Distributions 155

7 Continuous Probability Distributions 184

8 Sampling Methods and the Central Limit Theorem

9 Estimation and Confidence Intervals 242

10 One-Sample Tests of Hypothesis 274

11 Two-Sample Tests of Hypothesis 305

12 Analysis of Variance 334

13 Correlation and Linear Regression 365

14 Multiple Regression Analysis 418

15 Nonparametric Methods:

Nominal-Level Hypothesis Tests

469

Appendixes:

Data Sets, Tables, Software Commands, Answers

Glossary

Index

210

503

578

581

xix

CONTENTS

A Note from the Authors

Preface vii

vi

Cumulative Distributions 39

1What is Statistics?

E X E RC ISE S 42

1

Chapter Summary 43

Introduction 2

Chapter Exercises 44

Why Study Statistics? 2

Data Analytics 51

What is Meant by Statistics? 3

Practice Test 51

Types of Statistics 4

Descriptive Statistics 4

Inferential Statistics 5

Types of Variables 6

Levels of Measurement 7

Nominal-Level Data 7

Ordinal-Level Data 8

Interval-Level Data 9

Ratio-Level Data 10

EX ERC I SES 11

3Describing Data:

NUMERICAL MEASURES

53

Introduction 54

Measures of Location 54

The Population Mean 55

The Sample Mean 56

Properties of the Arithmetic Mean 57

Ethics and Statistics 12

E X E RC ISE S 58

Basic Business Analytics 12

The Median 59

The Mode 61

Chapter Summary 13

Chapter Exercises 14

E X E RC ISE S 63

Data Analytics 17

The Relative Positions of the Mean,

Median, and Mode 64

Practice Test 17

E X E RC ISE S 65

Software Solution 66

2Describing Data:

FREQUENCY TABLES, FREQUENCY

DISTRIBUTIONS, AND GRAPHIC

PRESENTATION 19

E X E RC ISE S 68

Why Study Dispersion? 68

Introduction 20

Range 69

Variance 70

Constructing Frequency Tables 20

E X E RC ISE S 72

Relative Class Frequencies 21

Graphic Presentation

of Qualitative Data 22

EX ERC I SES 26

Constructing Frequency Distributions 27

Relative Frequency Distribution 31

EX ERC I SES 32

Graphic Presentation of a Distribution 33

xx

The Weighted Mean 67

Population Variance 73

Population Standard Deviation 75

E X E RC ISE S 75

Sample Variance and Standard

Deviation 76

Software Solution 77

E X E RC ISE S 78

Interpretation and Uses of the Standard

Deviation 78

Histogram 33

Frequency Polygon 36

Chebyshev’s Theorem 78

The Empirical Rule 79

EX ERC I SES 38

E X E RC ISE S 80

xxi

CONTENTS

Ethics and Reporting Results 81

Chapter Summary 81

Pronunciation Key 82

Chapter Exercises 83

Data Analytics 86

Rules of Multiplication

to Calculate Probability 132

Special Rule of Multiplication 132

General Rule of Multiplication 133

Contingency Tables 135

Tree Diagrams 138

Practice Test 86

E X E RC ISE S 140

4Describing Data:

DISPLAYING AND EXPLORING DATA 88

Introduction 89

Principles of Counting 142

The Multiplication Formula 142

The Permutation Formula 143

The Combination Formula 145

E X E RC ISE S 147

Dot Plots 89

EXER C ISES 91

Chapter Summary 147

Measures of Position 92

Pronunciation Key 148

Quartiles, Deciles, and Percentiles 92

Chapter Exercises 148

EXER C ISES 96

Data Analytics 153

Practice Test 154

Box Plots 96

EXER C ISES 99

Skewness 100

EXER C ISES 103

Describing the Relationship between

Two Variables 104

Contingency Tables 106

EXER C ISES 108

Chapter Summary 109

Pronunciation Key 110

Chapter Exercises 110

Data Analytics 115

6Discrete Probability

Distributions 155

Introduction 156

What is a Probability Distribution? 156

Random Variables 158

Discrete Random Variable 159

Continuous Random Variable 160

The Mean, Variance, and Standard Deviation of a

Discrete Probability Distribution 160

Mean 160

Variance and Standard Deviation 160

Practice Test 115

E X E RC ISE S 162

5A Survey of Probability

Concepts 117

Binomial Probability Distribution 164

Introduction 118

How is a Binomial Probability

Computed? 165

Binomial Probability Tables 167

What is a Probability? 119

E X E RC ISE S 170

Approaches to Assigning Probabilities 121

Cumulative Binomial Probability

Distributions 171

Classical Probability 121

Empirical Probability 122

Subjective Probability 124

EXER C ISES 125

Rules of Addition for Computing

Probabilities 126

Special Rule of Addition 126

Complement Rule 128

The General Rule of Addition 129

EXER C ISES 131

E X E RC ISE S 172

Poisson Probability Distribution 173

E X E RC ISE S 178

Chapter Summary 178

Chapter Exercises 179

Data Analytics 183

Practice Test 183

xxiiCONTENTS

7Continuous Probability

Distributions 184

Introduction 185

Introduction 243

The Family of Uniform Probability

Distributions 185

Point Estimate for a Population Mean 243

EX ERC I SES 188

The Family of Normal Probability

Distributions 189

The Standard Normal Probability

Distribution 192

Applications of the Standard Normal

Distribution 193

The Empirical Rule 193

EX ERC I SES 195

Finding Areas under the Normal Curve 196

EX ERC I SES 199

EX ERC I SES 201

EX ERC I SES 204

Chapter Summary 204

Chapter Exercises 205

Data Analytics 208

Practice Test 209

8Sampling Methods and the

Central Limit Theorem 210

Introduction 211

Sampling Methods 211

Reasons to Sample 211

Simple Random Sampling 212

Systematic Random Sampling 215

Stratified Random Sampling 215

Cluster Sampling 216

EX ERC I SES 217

Sampling “Error” 219

Sampling Distribution of the Sample

Mean 221

EX ERC I SES 224

The Central Limit Theorem 225

EX ERC I SES 231

Using the Sampling Distribution of the

Sample Mean 232

EX ERC I SES 234

Chapter Summary 235

Pronunciation Key 236

9Estimation and Confidence

Intervals 242

Confidence Intervals for a Population Mean 244

Population Standard Deviation, Known σ 244

A Computer Simulation 249

E X E RC ISE S 251

Population Standard Deviation, σ Unknown 252

E X E RC ISE S 259

A Confidence Interval for a Population

Proportion 260

E X E RC ISE S 263

Choosing an Appropriate Sample Size 263

Sample Size to Estimate a Population Mean 264

Sample Size to Estimate a Population

Proportion 265

E X E RC ISE S 267

Chapter Summary 267

Chapter Exercises 268

Data Analytics 272

Practice Test 273

10One-Sample Tests

of Hypothesis 274

Introduction 275

What is Hypothesis Testing? 275

Six-Step Procedure for Testing a Hypothesis 276

Step 1: State the Null Hypothesis (H0) and the

Alternate Hypothesis (H1) 276

Step 2: Select a Level of Significance 277

Step 3: Select the Test Statistic 279

Step 4: Formulate the Decision Rule 279

Step 5: Make a Decision 280

Step 6: Interpret the Result 280

One-Tailed and Two-Tailed Hypothesis Tests 281

Hypothesis Testing for a Population Mean: Known

Population Standard Deviation 283

A Two-Tailed Test 283

A One-Tailed Test 286

p-Value in Hypothesis Testing 287

E X E RC ISE S 289

Hypothesis Testing for a Population Mean:

Population Standard Deviation Unknown 290

Chapter Exercises 236

E X E RC ISE S 295

Data Analytics 241

A Statistical Software Solution 296

Practice Test 241

E X E RC ISE S 297

xxiii

CONTENTS

13Correlation and

Linear Regression

Chapter Summary 299

Pronunciation Key 299

Chapter Exercises 300

365

Introduction 366

Data Analytics 303

What is Correlation Analysis? 366

Practice Test 303

The Correlation Coefficient 369

E X E RC ISE S 374

11Two-Sample Tests

of Hypothesis 305

Testing the Significance of the Correlation

Coefficient 376

E X E RC ISE S 379

Introduction 306

Two-Sample Tests of Hypothesis: Independent

Samples 306

EXER C ISES 311

Comparing Population Means with Unknown

Population Standard Deviations 312

Regression Analysis 380

Least Squares Principle 380

Drawing the Regression Line 383

E X E RC ISE S 386

Testing the Significance of the Slope 388

E X E RC ISE S 390

Two-Sample Pooled Test 312

Evaluating a Regression Equation’s

Ability to Predict 391

EXER C ISES 316

Two-Sample Tests of Hypothesis:

Dependent Samples 318

The Standard Error of Estimate 391

The Coefficient of Determination 392

Comparing Dependent

and Independent Samples 321

E X E RC ISE S 393

Relationships among the Correlation

Coefficient, the Coefficient of

Determination, and the Standard

Error of Estimate 393

EXER C ISES 324

Chapter Summary 325

Pronunciation Key 326

Chapter Exercises 326

E X E RC ISE S 395

Data Analytics 332

Interval Estimates of Prediction 396

Practice Test 332

12Analysis of Variance

334

Introduction 335

Assumptions Underlying Linear

Regression 396

Constructing Confidence and Prediction

Intervals 397

E X E RC ISE S 400

Comparing Two Population Variances 335

The F Distribution 335

Testing a Hypothesis of Equal Population

Variances 336

EXER C ISES 339

ANOVA: Analysis of Variance 340

ANOVA Assumptions 340

The ANOVA Test 342

EXER C ISES 349

Inferences about Pairs of Treatment Means 350

EXER C ISES 352

Chapter Summary 354

Pronunciation Key 355

Chapter Exercises 355

Data Analytics 362

Transforming Data 400

E X E RC ISE S 403

Chapter Summary 404

Pronunciation Key 406

Chapter Exercises 406

Data Analytics 415

Practice Test 416

14Multiple Regression

Analysis 418

Introduction 419

Multiple Regression Analysis 419

E X E RC ISE S 423

Evaluating a Multiple Regression Equation 425

Practice Test 363

The ANOVA Table 425

xxivCONTENTS

Multiple Standard Error of Estimate 426

Coefficient of Multiple Determination 427

Adjusted Coefficient of Determination 428

Goodness-of-Fit Tests: Comparing Observed and

Expected Frequency Distributions 479

Hypothesis Test of Equal Expected

Frequencies 479

EX ERC I SES 429

E X E RC ISE S 484

Inferences in Multiple Linear Regression 429

Global Test: Testing the Multiple

Regression Model 429

Evaluating Individual Regression Coefficients 432

EX ERC I SES 435

Evaluating the Assumptions of Multiple

Regression 436

Linear Relationship 437

Variation in Residuals Same for Large

and Small ŷ Values 438

Distribution of Residuals 439

Multicollinearity 439

Independent Observations 441

Qualitative Independent Variables 442

Hypothesis Test of Unequal Expected

Frequencies 486

Limitations of Chi-Square 487

E X E RC ISE S 489

Contingency Table Analysis 490

E X E RC ISE S 493

Chapter Summary 494

Pronunciation Key 495

Chapter Exercises 495

Data Analytics 500

Practice Test 501

Stepwise Regression 445

EX ERC I SES 447

Review of Multiple Regression 448

Chapter Summary 454

APPENDIXES 503

Appendix A: Data Sets 504

Pronunciation Key 455

Appendix B: Tables 513

Chapter Exercises 456

Appendix C: Software Commands 526

Data Analytics 466

Appendix D: Answers to Odd-Numbered

Chapter Exercises 534

Practice Test 467

15Nonparametric Methods:

NOMINAL-LEVEL HYPOTHESIS

TESTS 469

Introduction 470

Test a Hypothesis of a Population

Proportion 470

EX ERC I SES 473

Two-Sample Tests about Proportions 474

EX ERC I SES 478

Solutions to Practice Tests 566

Appendix E: Answers to Self-Review 570

Glossary 578

Index 581

Key Formulas

Student’s t Distribution

Areas under the Normal Curve

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